A NOVO BROADBAND: Trustee Has Until Oct. 31 to Object to Claims--------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware gaveExecutive Sounding Board Associates, Inc. -- the LiquidatingTrustee appointed under the confirmed Amended Plan of Liquidationof A Novo Broadband, Inc. -- a further extension, until Oct. 31,2005, to object to proofs of claim filed against the Debtor'sestate.

As previously reported in the Troubled Company Reporter, the Courtconfirmed the Debtor's Plan on Jan. 8, 2004, and the Plan tookeffect on March 18, 2004.

Pursuant to the Plan, Executive Sounding was appointed as theLiquidating Trustee to supervise the wind-down and dissolution ofthe former Debtor as a corporate and business entity. One ofExecutive Sounding's tasks is to file and prosecute objections toproofs of claim filed against the Debtor's estate.

The Liquidating Trustee has determined that additional claimsremain on the register are objectionable and an extension of theclaims objection period is necessary.

Headquartered in New Castle, Delaware, A Novo Broadband, Inc., wasengaged primarily in the repair and servicing of broadbandequipment for equipment manufacturers and operators of cable andother broadband systems in North America. The Company filed forchapter 11 protection on December 18, 2002 (Bankr. Del. Case No.02-13708). Brendan Linehan Shannon, Esq., and M. Blake Cleary,Esq., at Young, Conaway, Stargatt & Taylor, LLP represent theDebtor. When the Company filed for protection from its creditors,it listed $12,356,533 in total assets and $10,577,977 in totaldebts. The Court confirmed the Debtor's chapter 11 Plan onJan. 8, 2004, and the Plan took effect on March 18, 2004.Executive Sounding Board Associates, Inc., is the LiquidatingTrustee for the Debtor's estate. James E. Hugget, Esq., atHarvey, Pennington Ltd., represents the Liquidating Trustee.

As reported in the Troubled Company Reporter on June 23, 2005,Fitch Ratings has upgraded and removed the ratings of AESCorporation from Rating Watch Positive, where it was initiallyplaced on Jan. 18, 2005 pending review of the company's year-endfinancial results. Fitch said the Rating Outlook is Stable.

Following the completion of its review, Fitch's upgrade reflectsthe significant progress AES had made in retiring parent companyrecourse debt and improving liquidity. In addition, AES hasrefinanced several near term debt maturities and extended thecompany's debt maturity profile. The company has successfullyaccessed both the debt and equity markets in 2004 and 2003.

ANC RENTAL: Trust Has Until Dec. 15 to Object to Proofs of Claim----------------------------------------------------------------The U.S. Bankruptcy Court for the District of Delaware extendedthe deadline for ANC Liquidating Trust, as successor to ANC RentalCorporation and its debtor-affiliates, to file objections toproofs of claims to Dec. 15, 2005.

Mr. Grey states that 2,000 of the remaining claims may becharacterized as personal injury or wrongful death claims. TheTrust intends to seek leave to file an omnibus objection withrespect to the Personal Injury or Wrongful Death Claims andcompel the claimants to participate in mediation or voluntaryarbitration programs.

The Trust asserts that the requested extension will enable themto conclude the claims reconciliation process in a timely, cost-efficient and complete manner.

"Completing this contract is an extremely important step in ourrestructuring process," said Mark Burgess, CEO of Anchor. "We areexcited about continuing our relationship with this very importantcustomer and look forward to supplying quality glass containers toMott's and Snapple for the next several years."

Headquartered in Tampa, Florida, Anchor Glass ContainerCorporation is the third-largest manufacturer of glass containersin the United States. Anchor manufactures a diverse line of flint(clear), amber, green and other colored glass containers for thebeer, beverage, food, liquor and flavored alcoholic beveragemarkets. The Company filed for chapter 11 protection on Aug. 8,2005 (Bankr. M.D. Fla. Case No. 05-15606). Robert A. Soriano,Esq., at Carlton Fields PA, represents the Debtor in itsrestructuring efforts. When the Debtor filed for protectionfrom its creditors, it listed $661.5 million in assets and$666.6 million in debts.

ANCHOR GLASS: Wants To Reject Campbell Consulting Agreement-----------------------------------------------------------Anchor Glass Container Corporation asks the U.S. Bankruptcy Courtfor the Middle District of Florida for permission to reject itsConsulting Services Agreement and General Release dated March 9,2005, with Darrin J. Campbell.

Pursuant to the Campbell Contract, Mr. Campbell is to provideconsulting services as to business strategy, customer relationsand union relations as reasonably requested by Anchor's Board ofDirectors, for a term commencing April 2005, through December 31,2005.

In exchange, Anchor will pay $350,000 to Campbell in ninesubstantially equal monthly installments, commencing April 1,2005.

Kathleen S. McLeroy, Esq., at Carlton Fields PA, in Tampa,Florida, tells the Court that Mr. Campbell has not preformed anyservices pursuant to the Campbell Contract since the PetitionDate. The Debtor believes it no longer needs Mr. Campbell'sservices.

The meeting will be held on the 16th floor of the Wilson PlazaBuilding located at 606 North Carancahua in Corpus Christi, Texas.

All creditors are invited, but not required, to attend. ThisMeeting of Creditors offers the one opportunity in a bankruptcyproceeding for creditors to question a responsible officer ofthe Debtor under oath about the company's financial affairs andoperations that would be of interest to the general body ofcreditors.

ASARCO LLC: Wants to Sell Surplus Properties in Utah & New Mexico-----------------------------------------------------------------ASARCO LLC seeks authority from the U.S. Bankruptcy Court for theU.S. Bankruptcy Court for the Southern District of Texas, CorpusChristi Division, to sell surplus real estate in Salt Lake County,Utah, and Deming, New Mexico, free and clear of liens, claims,encumbrances and interests. ASARCO also seeks to assume theexecutory real estate contracts relating to the surplus realestate.

Salt Lake Property

Western States Lodging and ASARCO, LLC, entered into a RealEstate Purchase Contract dated July 15, 2005, for the sale of6.9 acres known as 3422 South 700 West, located in Salt LakeCounty for $2,000,000. ASARCO holds a $5,000 earnest moneydeposit from Western States.

While the Utah Transit Authority appraised the property at $2.15million in July 2005, ASARCO relates that it has had the propertyon the market for four years, and has not received a better offerfrom a serious buyer.

The closing date for the sale is Oct. 31, 2005.

Deming Property

As of July 13, 2005, ABC Mining, LLC, and ASARCO entered into aPurchase and Sale Agreement for the sale "as is, where is" to ABCMining of ASARCO's mill site located on Peru Mill Road, in Townof Deming, in County of Luna, New Mexico. The property,consisting of 200 acres of permitted land for facility operationsand an additional 80 acres of unpermitted land adjacent to thefacility, is to be sold for $500,000, and the buyer has givenASARCO a $50,000 earnest money contract. The site value isestimated at $224,800, using appraisal comparables on Aug. 18,2005.

ASARCO says the offer from ABC Mining is the best one receivedfrom a serious buyer in eight years of marketing the property.

$2.5-Mil. Cash Injection to ASARCO's Estate

Jack L. Kinzie, Esq., at Baker Botts, L.L.P., in Dallas, Texas,tells the Court that the sale of both properties will bring in$2.5 million for assets that are not necessary to the Debtors'reorganization, and which is decreasing in value. Mr. Kinzieasserts that the net effect of the transactions, if approved,will be the divestiture of real property that has been on themarket for several years for fair and reasonable prices.

Under Section 363(f) of the Bankruptcy Code, a debtor may sellproperty free and clear of any lien, claim or interest if:

(1) applicable non-bankruptcy law permits sale of the property free and clear of that interest;

(2) the entity consents;

(3) the interest is a lien and the price at which that property is sold is greater than the aggregate value of all liens on that property;

(4) the interest is in bona fide dispute; or

(5) that entity could be compelled, in a legal or equitable proceeding to accept money satisfaction of that interest.

Mr. Kinzie attests that the Debtors satisfy the requirementsbecause all Encumbrances will to attach to the proceeds from thesale of assets with the same force and effect as those lienspreviously had on the assets, subject to the Debtors' rights anddefenses, if any.

Moreover, the Debtors are not aware of any Encumbrances on theSurplus Property, Mr. Kinzie says.

Mr. Kinzie further notes that the Real Estate Contracts willbring valuable consideration into the estate.

Mr. Holzer relates that ASARCO and Tucson Electric have enteredinto a Third Amended and Restated Memorandum of Understandingdated effective Sept. 1, 2005, which amends the payment termsof the Electrical Service Agreement. ASARCO is in default underthe Agreement for $25,715. Mr. Holzer notes that Tucson Electrictimely requested additional adequate assurance from ASARCO.

ASARCO believes that the Electrical Service Agreement reflectsspecial pricing for electricity that is tied to copper's price.A pricing arrangement has been and will continue to be afinancial benefit to ASARCO during the term of the contract.

Accordingly, ASARCO sought and obtained the Court's authority toassume the Electrical Service Agreement with Tucson Electric.

ASARCO and Tucson will follow weekly billing procedures for itsMission Complex. In the event payment is not received for theMission Account in accordance with the Memorandum ofUnderstanding, Tucson Electric will have the right to terminateits service to ASARCO without further Court order.

In addition, the parties agreed that Account No. 6837563881 forservice at ASARCO's office in Tucson will be billed monthly.ASARCO will deposit with Tucson Electric $20,600 for the OfficeAccount, representing 2-1/2 times ASARCO's estimated maximummonthly bill for the Office Account. Tucson Electric will alsobe entitled to an administrative priority claim for allpostpetition electrical services provided.

ATKINS NUTRITIONALS: Gets Open-Ended Period to Decide on Leases---------------------------------------------------------------The U.S. Bankruptcy Court for the Southern District of New Yorkextended until the confirmation of a plan of reorganization, theperiod within which Atkins Nutritionals, Inc., and its debtor-affiliates can elect to assume, assume and assign or reject theirunexpired leases on four non-residential real properties.

The Debtors told the Bankruptcy Court that they have been unableto evaluate the unexpired leases because they have concentrated onsecuring debtor-in-possession financing, formulating a plan ofreorganization and disclosure statement and other pressing mattersin their bankruptcy cases.

The Debtors assured the court that the proposed extension will notprejudice their lessors, as they remain current on theirobligations under the leases.

Headquartered in New York, New York, Atkins Nutritionals, Inc.-- http://atkins.com/-- sells nutritional supplements based on its founder, Dr. Robert C. Atkins' nutritional philosophy ofcontrolled-carbohydrate lifestyle. The Debtors also sell morethan 100 food products and nutritional supplements, as well asinformational products such as diet books and cookbooks. Atkins'products are sold in more than 30,000 stores in North Americaunder numerous trademarks. The Company, along with AtkinsNutritionals Holdings, Inc., Atkins Nutritionals Holdings II,Inc., and Atkins Nutritionals (Canada) Limited, filed forchapter 11 protection on July 31, 2005 (Bankr. S.D.N.Y. Case No.05-15913). Marcia L. Goldstein, Esq., at Weil Gotshal & MangesLLP, represents the Debtors in the United States, while lawyers atOsler, Hoskin & Harcourt, LLP, represents the Debtors in Canada.As of May 28, 2005, they listed $265.6 million in total assets and$323.2 million in total debts.

BECKMAN COULTER: Inks Pact to Buy All of Diagnostic Systems' Stock------------------------------------------------------------------Beckman Coulter, Inc., (NYSE:BEC) has signed an agreement toacquire all of the stock of Diagnostic Systems LaboratoriesCorporation of Webster, Texas, a leading provider of specialtyimmunoassays including proprietary technology for reproductiveendocrinology and cardiovascular risk assessment. Subject tocustomary closing conditions, the acquisition is expected to closein mid-October. The acquisition is presently estimated to be$0.01 dilutive to Beckman Coulter's fourth quarter EPS and $0.06dilutive in 2006 becoming accretive to earnings in the fourthquarter of 2006.

"Coupling DSL's expertise and proprietary tests with BeckmanCoulter's industry leading immunoassay platforms should be awinning combination," said Michael Whelan, group vice president ofBeckman Coulter's immunoassay business. "DSL is a matureorganization with significant scientific and clinicalcollaboration skills. Together we aim to quickly broaden ourimmunoassay menu and strategically advance our already successfulimmunoassay franchise."

"By joining Beckman Coulter and taking advantage of theirestablished infrastructure, we believe we can boost our positionin specialty immunoassay testing and enable our group to reach itsfull potential in the marketplace," said Gopal Savjani, presidentand founder of Diagnostic Systems Laboratories.

DSL has a proven history of collaboration with clinical researchleaders to identify new and innovative immunoassays to improvepatient care. DSL has successfully combined these relationshipswith a rapid product development process to quickly deliver noveltests to the pharmaceutical and life science research community aswell as the traditional clinical laboratory. DSL providesproducts in multiple formats and methodologies to meet a diversevariety of testing needs.

Beckman Coulter, Inc., headquartered in Fullerton, California, isa leading provider of instrument systems and complementaryproducts that simplify and automate processes in biomedicalresearch and clinical laboratories.

* * *

As reported in the Troubled Company Reporter on May 27, 2005,Moody's Investors Service placed the ratings of Beckman Coulter,Inc. under review for possible upgrade reflecting double digitrevenue growth and an expansion in free cash flow generated by thecore business. In particular, the company continues to gain sharein the immunodiagnostic market and will launch several newproducts including two new analyzers for its routine chemistrybusiness. Moody's anticipates that continued growth in its corebusiness will lead to higher free cash flow over the next fewyears.

BETHLEHEM STEEL: ISG Wants Right to $1.6MM DOE Refund Distribution------------------------------------------------------------------As reported in the Troubled Company Reporter on August 4, 2005,The Bethlehem Steel Corporation Liquidating Trust asked JudgeLifland to enforce the terms of the Asset Purchase Agreement andfind that the Refund is an "Excluded Asset" as defined in the APAto be distributed to the beneficiaries of the Trust.

In connection with the Refund Program, Bethlehem SteelCorporation duly submitted an application for a refund based onits refined petroleum purchases made during the program years.Mr. Kibler asserts that the refund process was delayed andprolonged because the DOE continued to collect crude oilovercharges into the 21st century.

In May 2004, the DOE promulgated procedures for the final round ofpayments to successful claimants in the Refund Program. The DOENotice was sent to all claimants purchasing a certain amount ofrefined petroleum products during the controls period, includingBethlehem Steel. The notice informed claimants of theavailability of the final crude oil refund payment and soughtverification of the information contained in the DOE's databasefor each claimant. Claimants were required to confirm byDecember 31, 2004, if they should receive the refund or not, forany reason, including their dissolution.

The DOE Notice published in the Federal Register reflected thecalculation of the final refund amounts. The published refund towhich Bethlehem Steel is entitled to receive equaled $1.6 million.According to the Procedures, the DOE was tohave begun distributingrefunds by February 1, 2005.

International Steel Group Inc. advised The Bethlehem SteelCorporation Liquidating Trust of its position that the Refund wasan Acquired Asset under the APA among Bethlehem, ISG and ISGAcquisition Inc., dated March 12, 2003, as subsequently amended onApril 22, 2003, and May 6, 2003. Hence, ISG asserted that theRefund was an asset transferred to it under the APA.

In response, the Liquidating Trust argued that the Refund was anExcluded Asset under the APA and that, accordingly, theLiquidating Trust intended to file the appropriate documentationwith the DOE requesting the Refund.

Subsequently, ISG filed a request with the DOE that ISG be listedas the beneficiary of the Refund.

On December 22, 2004, the Liquidating Trust sent a Verification ofthe information contained in the DOE records seeking to establishthe Liquidating Trust, the successor-in-interest to BethlehemSteel, as the entity to which the Refund distribution should bemade.

ISG Responds

Philip P. Kalodner, Esq., in Gladwyne, Pennsylvania, argues thatthe right to further crude oil refunds was conveyed toInternational Steel Group Inc., now known as Mittal Steel USA ISGInc., pursuant to the Asset Purchase Agreement because:

-- the Refund was an asset of Bethlehem Steel Corporation and the APA conveyed to ISG all assets of Bethlehem Steel;

-- the Refund was an "account receivable" of Bethlehem Steel, and thus was explicitly conveyed; and

-- even if the Refund could be categorized merely as a "claim," it was not an excluded claim, and was therefore part of "all claims" of Bethlehem Steel conveyed to ISG.

Even if the right to the Refund was in the first instance excludedfrom the assets conveyed to ISG as an "excluded claim" and wasretained by Bethlehem Steel, the right to further crude oil refunddistributions, and any cash received in the distribution, are partof the "excess purchase price," which must be conveyed or paid toISG pursuant to the APA, Mr. Kalodner says.

Accordingly, ISG asks the Court to:

(a) deny Bethlehem Steel Liquidating Trust's request;

(b) declare that ISG has the right to the Refund;

(c) direct the Liquidating Trust to advise the U.S. Department of Energy that the Liquidating Trust has no right to the further refunds to be distributed on the Bethlehem claim, and that the right is vested in ISG.

Headquartered in Bethlehem, Pennsylvania, Bethlehem SteelCorporation -- http://www.bethlehemsteel.com/-- was the second- largest integrated steelmaker in the United States, manufacturingand selling a wide variety of steel mill products including hot-rolled, cold-rolled and coated sheets, tin mill products, carbonand alloy plates, rail, specialty blooms, carbon and alloy barsand large diameter pipe. The Company filed for chapter 11protection on October 15, 2001 (Bankr. S.D.N.Y. Case No. 01-15288). Jeffrey L. Tanenbaum, Esq., and George A. Davis, Esq., atWEIL, GOTSHAL & MANGES LLP, represent the Debtors in theirrestructuring, the centerpiece of which was a sale ofsubstantially all of the steelmaker's assets to InternationalSteel Group. When the Debtors filed for protection from theircreditors, they listed $4,266,200,000 in total assets and$4,420,000,000 in liabilities. Bethlehem obtained confirmation ofa chapter 11 plan on October 22, 2003, which took effect onDec. 31, 2003. (Bethlehem Bankruptcy News, Issue No. 58;Bankruptcy Creditors' Service, Inc., 215/945-7000)

BLOCKBUSTER INC: Says 3rd Quarter Results Comply with Covenants---------------------------------------------------------------Blockbuster Inc. (NYSE: BBI, BBI.B) reported that its thirdquarter reported results would reflect that the Company is incompliance with its debt covenants for the third quarter.

The Company also disclosed that its domestic same-store rentalrevenues for the third quarter of 2005 outperformed the industry,which according to Rentrak estimates was down 11.7% for thequarter, including both store-based and online rental revenues.By contrast, Blockbuster preliminarily estimates domestic same-store rental revenues for the third quarter of 2005 to be downapproximately 1%, including online rental revenues and after theimpact of the elimination of extended viewing fees, whichaccounted for approximately 13% of the Company's third quarter2004 rental revenues.

Additionally, the Company said it remains committed to growingthe online business, but that it expects to reach its goal oftwo million subscribers to BLOCKBUSTER Online(TM) later in 2006than originally anticipated.

"In the face of a challenging rental industry, we believe we willcontinue to outperform the store-based rental industry as a resultof the elimination of extended viewing fees, and we seesignificant growth opportunities in the online rental businessthat we intend to aggressively pursue," said John Antioco,Blockbuster Chairman and CEO.

The Company expects to announce its full third quarter results inearly November.

Blockbuster Inc. -- http://www.blockbuster.com/-- is a leading global provider of in-home movie and game entertainment, with morethan 9,100 stores throughout the Americas, Europe, Asia andAustralia.

* * *

As reported in the Troubled Company Reporter on Aug 15, 2005,Fitch has downgraded Blockbuster Inc. to:

-- Senior subordinated notes to 'CC' from 'B-' with an 'R6' recovery rating.

Fitch said the Rating Outlook remains Negative.

Also, Moody's Investors Service downgraded the long term debtratings of Blockbuster Inc. (corporate family to B3 andsubordinated notes to Caa3) and the Speculative Grade LiquidityRating to SGL-4. The outlook is negative.

BONUS STORES: Wants Until Feb. 13 to Remove Civil Actions---------------------------------------------------------William Kaye, the liquidating agent of Bonus Stores, Inc., asksthe U.S. Bankruptcy Court for the District of Delaware to extenduntil February 13, 2006, the deadline to remove civil actions.

Mr. Kaye tells the Court that the Debtor is a party to variousactions currently pending in different state courts. He believesthat an additional time to decide whether any state court actionsremain with the Debtor's estate or removal of those actions isnecessary.

Furthermore, the extension of the removal period will protect theDebtor's right to remove any of the state court actions and anyadditional actions discovered through an investigation and reviewof claims asserted against the Debtor's estate.

BOWATER INC: Expects $35M to $40M Operating Income in 3rd Quarter-----------------------------------------------------------------Bowater Incorporated (NYSE: BOW) expects third quarter operatingincome, excluding a gain of approximately $9 million on the saleof assets, to be in the range of $35 million to $40 million.Higher transaction prices for the company's paper products wereoffset by higher manufacturing and distribution costs, related toHurricane Katrina, a stronger Canadian dollar and highermaintenance expenses. Prices of pulp and lumber in the thirdquarter were also lower than the second quarter.

The company also disclosed a program, which is expected to reduceannual operating costs by $80 million. This program will be fullyimplemented by the end of 2006 and driven by operating anddistribution cost savings.

"The sharp rise in the Canadian dollar and energy prices requiresus to be even more aggressive at reducing costs," said Arnold M.Nemirow, Chairman, President and Chief Executive Officer. "Wehave been very successful in implementing significant costreduction programs in the past, and I expect we will execute thisprogram in the same manner."

Bowater will release third quarter financial results before themarket opens on Wednesday, Oct. 26, 2005. A management conferencecall will be held to discuss these financial results at 10:00 a.m.EDT, October 26, 2005. The conference call number is 800-288-8967or 612-234-9960 (international). The call will also be broadcastvia the Internet. Interested parties may connect to the BowaterWeb site at http://www.bowater.com/then follow the on-screen instructions for access to the call and related information. Areplay of the call will be available from 1:30 p.m. EDT onWednesday, October 26, through Wednesday, November 2, on thewebsite or by dialing 800-475-6701 or 320-365-3844 (international)and using the access code 798866.

Headquartered in Greenville, South Carolina, Bowater Incorporatedis a leading producer of newsprint and coated mechanical papers.In addition, the company makes uncoated mechanical papers,bleached kraft pulp and lumber products. The company has 12 pulpand paper mills in the United States, Canada and South Korea and12 North American sawmills that produce softwood lumber. Bowateralso operates two facilities that convert a mechanical base sheetto coated products. Bowater's operations are supported byapproximately 1.4 million acres of timberlands owned or leased inthe United States and Canada and 30 million acres of timbercutting rights in Canada. Bowater is one of the world's largestconsumers of recycled newspapers and magazines. Bowater commonstock is listed on the New York Stock Exchange, the PacificExchange and the London Stock Exchange. A special class of stockexchangeable into Bowater common stock is listed on the TorontoStock Exchange (TSX: BWX).

As reported in the Troubled Company Reporter on Mar. 30, 2005,Fitch has rated Bowater's senior unsecured bonds and bank debt'BB-'. Fitch says the Rating Outlook is Stable. Nearly$2.5 billion of debt is subject to the rating.

As reported in the Troubled Company Reporter on May 14, 2004,Standard & Poor's Ratings Services assigned its 'BB' bank loanrating to newsprint producer Bowater Inc.'s $435 million seniorunsecured revolving credit facility due 2007. All other ratingswere affirmed at 'BB'. S&P says the outlook is stable.

BROOKFIELD PROPERTIES: O&Y Shareholders Okay Stock Acquisition--------------------------------------------------------------Brookfield Properties Corporation (BPO: NYSE, TSX) and itsCanadian based subsidiary, BPO Properties Ltd. (BPP: TSX),reported that its bidding consortium, which includes BPOProperties, CPP Investment Board and Arca Investments Inc.,received approval from the shareholders of O&Y PropertiesCorporation (OYP:TSX) to proceed with an arrangement whereby anewly formed company owned by the Consortium will acquire all ofthe issued and outstanding shares of O&Y Properties for C$12.72per share in cash. Shareholders voted 99.9% in favor of theArrangement.

The transaction is conditional on Newco acquiring more than 50% ofthe issued and outstanding limited voting units of O&Y REIT, otherthan those owned by O&Y Properties, for C$16.25 per limited votingunit under a takeover bid that expires on Oct. 17, 2005.

"We, along with our partners, are pleased with the outcome of thevote by O&Y Properties' shareholders and look forward to asimilarly successful completion of the tendering process for O&YREIT unitholders," commented Ric Clark, President and CEO ofBrookfield Properties Corporation.

Listed on both the New York and Toronto Stock Exchanges underthe symbol BPO, Brookfield Properties Corporation --http://www.brookfieldproperties.com/-- owns, develops and manages premier North American office properties. The Brookfieldportfolio comprises 47 commercial properties and development sitestotaling 46 million square feet, including landmark propertiessuch as the World Financial Center in New York City and BCE Placein Toronto.

* * *

As reported in the Troubled Company Reporter on Oct. 6, 2004,Standard & Poor's Ratings Services assigned its 'P-3(High)'Canadian national scale and 'BB+' global scale preferred shareratings to Brookfield Properties Corp.'s C$150 million -- with anunderwriter's option of up to an additional C$50 million -- 5.20%cumulative class AAA redeemable preferred shares, series K.

At the same time, Standard & Poor's affirmed its ratingsoutstanding on the company, including the 'BBB' long-term issuercredit rating. S&P said the outlook is stable.

CALPINE CORP: CCFC Unit Prices $300-Mil. Preferred Shares Offering------------------------------------------------------------------Calpine Corporation's [NYSE:CPN] indirect subsidiary, CCFCPreferred Holdings, LLC, has priced its $300 million offering of6-Year Redeemable Preferred Shares due 2011 at LIBOR plus 950basis points. Net proceeds from the offering of the RedeemablePreferred Shares will be used as permitted by Calpine's existingbond indentures. Calpine expects the transaction to close withinthe next two weeks.

The Redeemable Preferred Shares have not been registered under theSecurities Act of 1933, as amended, and may not be offered in theUnited States or any state absent registration or an applicableexemption from registration requirements. The RedeemablePreferred Shares were offered in a private placement in the UnitedStates under Section 4(2) and Regulation D under the SecuritiesAct of 1933.

Calpine Corporation -- http://www.calpine.com/-- supplies customers and communities with electricity from clean, efficient,natural gas-fired and geothermal power plants. Calpine owns,leases and operates integrated systems of plants in 21 U.S.states, three Canadian provinces and the United Kingdom. Itscustomized products and services include wholesale and retailelectricity, natural gas, gas turbine components and services,energy management, and a wide range of power plant engineering,construction and operations services. Calpine was founded in1984. It is included in the S&P 500 Index and is publicly tradedon the New York Stock Exchange under the symbol CPN.

* * *

As reported in the Troubled Company Reporter on June 23, 2005,Standard & Poor's Ratings Services assigned its 'CCC' rating toCalpine Corp.'s (B-/Negative/--) planned $650 million contingentconvertible notes due 2015. The proceeds from that convertibledebt issue will be used to redeem in full its High Tides IIIpreferred securities. The company will use the remaining netproceeds to repurchase a portion of the outstanding principalamount of its 8.5% senior unsecured notes due 2011. S&P said itsrating outlook is negative on Calpine's $18 billion of total debtoutstanding.

As reported in the Troubled Company Reporter on May 16, 2005,Moody's Investors Service downgraded the debt ratings of CalpineCorporation (Calpine: Senior Implied to B3 from B2) and itssubsidiaries, including Calpine Generating Company (CalGen: firstpriority credit facilities to B2 from B1).

The asset sale transaction included substantially all of theassets of the telecommunications segment with a book value ofapproximately US$19.2 million, and the transfer of certaindesignated liabilities of the telecommunications segment in theaggregate amount of approximately US$24.2 million.

"With the transaction of our telecommunications operationscomplete, we can fully focus our efforts on realizing value fromour intellectual property, which includes two foundational patentsin Voice over Internet Protocol (VoIP)," said Allan Silber,Chairman and Chief Executive Officer of C2 Global Technologies.

"We believe that the acquisition of Acceris gives us a solidplatform for further acquisitions in the telecommunicationsindustry," said Elam Baer, Chief Executive Officer of NorthCentral Equity LLC.

About North Central Equity LLC

North Central Equity LLC is a Minneapolis, Minnesota basedprivately owned holding company, established in 2004, withexperience in the telecommunications industry.

About C2 Global Technologies

C2 Global Technologies -- http://www.c-2technologies.com/-- is a broad based communications company serving residential,small- and medium-sized business and large enterprise customers inthe United States. A facilities-based carrier, it provides arange of products including local dial tone and 1+ domestic andinternational long distance voice services, as well as fullymanaged and fully integrated data and enhanced services. C2offers its communications products and services both directly andthrough a network of independent agents, primarily via multi-levelmarketing and commercial agent programs. C2 also offers a provennetwork convergence solution for voice and data in Voice overInternet Protocol communications technology and holds twofoundational patents in the VoIP space.

As of June 30, 2005, C2 Global's stockholders' deficit widen to$77,442,000, compared to a $61,965,000 deficit at Dec. 31, 2004.

CHAMPION HOME: Moody's Rates New $200 Million Facilities at B1--------------------------------------------------------------Moody's Investors Services assigned a B1 rating to Champion HomeBuilders Co.'s new $200 million credit facilities and affirmed thecorporate family rating of Champion Enterprises, Inc. at B1 aswell as a B3 rating on the company's $89 million senior notes.

* a $100 million term loan; * $60 million unfunded letters of credit facility; and * $40 million revolving credit facility.

The facilities are being issued by Champion Home Builders Co. tobe used primarily to finance the company's tender offer andrelated consent solicitation for all of the company's 11.25%Senior Notes due 2007 and to refinance the company's previousundrawn credit facility. Moody's notes that prior to therefinancing, the company had approximately $52 million in lettersof credit issued. The new facilities will be guaranteed byChampion Enterprises, Inc. and each existing and subsequentlyacquired or organized domestic and, with certain limitations,foreign subsidiary of the company and secured by substantially allthe assets of Champion Enterprises, Inc., Champion Home BuildersCo., and each other guarantor, subject to certain exceptions.

The B1 rating on the new credit facilities is affected by thecompany's relatively high leverage and driven by the uncertaintyin the company's ability to pass on higher input prices tocustomers in an increasing interest rate environment. Moody'snotes that the company's strong recent revenue growth is primarilyattributable to increasing unit prices and not to increasing unitvolumes. The company's revenues could decline significantly werethe economy, including manufactured housing segment, to soften.Moody's projects the company's total debt to EBITDA for the LTMperiod September 30, 2005 to be approximately 3.1 times. Interestcoverage ratio for the same period is projected to be around 4times.

The change in outlook reflects the company's improving creditprofile including, but not limited to, decreasing leveragerelative to the company's past leverage levels and good cash flowgeneration. The positive outlook was primarily driven by therecent improvement in the company's free cash flow generation, forLTM period ended June 30, 2005 the company's free cash flow tototal debt as adjusted by Moody's was 13% compared with negative7.7% FYE 2004.

Additionally, the upgrade in outlook considers the company'sexpanding margins and higher sales in dollar terms. Champion'ssecond quarter 2005 manufacturing segment margin increased to 8.5%versus 6.5% in the second quarter of 2004. The increaserepresents the highest segment margin since the third quarter of1998. The company's profitability is expected to improve furtheras the company is continuing to expand into the modular homesegment.

The ratings and/or outlook could improve if the company sustainsand/or exceeds its current cash flow generation relative to debtand if there is improvement in unit sales. Moody's notes thatwhile the company's free cash flow to debt ratio, as adjusted byMoody's, is an indicative of a Ba3 rating, the company's weaktrack record and industry's volatility calls for a sustainableimprovement before upgrading the rating. In Moody's opinion thecompany is well positioned in its ratings category. The ratingsand/or outlook could deteriorate if the company is not able topass through input price increases thereby lowering itsprofitability and cash flow generation.

Moody's also has affirmed Champion's SGL-2 rating. The ratingconsiders the company's good liquidity as evidenced by:

The company's internal cash generation is expected to cover thecompany's working capital needs and planned capital expenditures.The new financing structure will provide Champion with access to a$40 million revolving credit facility that is expected to remainmostly undrawn and a $60 million letters of credit facility thathas approximately $52 million letters of credit issued. Thecovenants on the credit facilities are expected to include amaximum total debt ratio set initially at 4 times with step-downprovisions to 2.75 times and minimum interest coverage covenantset at 3 times. Moody's notes that the company's capitalexpenditures will also be limited by the covenants. The SGL-2rating is negatively impacted by significant seasonal workingcapital swings and limited sources of alternative liquidity.

CHI-CHI'S: Court Permits Asset Sale to BR Acquisitions for $1.8MM----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorizedChi-Chi's, Inc., to :

a) sell its interest in a parcel of commercial property located in Greenfield, Wisconsin, to BR Acquisitions, LLC free and clear of all liens, claims, rights interests and encumbrances; and

In June 2005, the Debtor and Polacheck entered into the ListingContract for purposes of marketing and selling the commercialproperty.

The Debtor originally obtained approval from the Court to sell thecommercial property to WI QSL, LLC for $1.7 million. But one ofthe contingencies in the purchase agreement between the Debtor andWI was not fulfilled, and WI was permitted to back out of theasset sale and obtained the return of its deposit.

As a result of Polacheck's renewed marketing efforts, the Debtorand BR Acquisitions entered into a Sale Agreement on Sept. 13,2005, calling for the sale of the commercial property to BRAcquisitions for a total price of $1.8 million. The Debtor's 25%interest in the property accounts for $450,000 of the purchaseprice, and the Debtor will receive $423,000 of the net saleproceeds after payment of the applicable brokerage commissions.

Pursuant to the terms of the Listing Contract, Polacheck willreceive a brokerage commission of $108,000 to be split 50% withMid-America, BR Acquisitions' broker. The Court orders thatPolacheck's commission is subject to disgorgement if the Debtor'spending motion to employ Polacheck as an Ordinary CourseProfessional is not authorized in accordance with the proceduresprovided for by the Court's Ordinary Course Professional Orderdated Feb. 14, 2004.

The Court orders that in the event that the current sale of theproperty to BR Acquisitions is not consummated, the Debtor isauthorized to sell the property to any purchaser for a sale pricegreater than or equal to $1.7 million.

The Court orders that if the Official Committee of UnsecuredCreditors and the U.S. Trustee fail to object to the sale of theproperty to BR Acquisitions within 15 days of the Sale Notice sentto the Committee and the U.S. Trustee, the asset sale can thenclose without further action of the Court and its orderauthorizing the Debtor's motion will be the final order approvingthe asset sale.

Headquartered in Irvine California, Chi-Chi's, Inc., is a director indirect operating subsidiary of Prandium and FRI-MRDCorporation and each is engaged in the restaurant business. TheDebtors filed for chapter 11 protection on October 8, 2003 (Bankr.Del. Case No. 03-13063-CGC). Bruce Grohsgal, Esq., Laura DavisJones, Esq., Rachel Lowy Werkheiser, Esq., and Sandra Gail McLamb,Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C.,represent the Debtors in their restructuring efforts. When theDebtors filed for bankruptcy, they estimated $50 million to $100million in assets and more than $100 million in liabilities.

CKE RESTAURANTS: Board Declares $0.04 Common Stock Dividend-----------------------------------------------------------CKE Restaurants, Inc.'s (NYSE: CKR) Board of Directors declared athird quarter dividend of $0.04 per share of common stock to bepaid on Nov. 28, 2005, to its stockholders of record at the closeof business on Nov. 7, 2005. The Company had 59,531,941 shares ofcommon stock issued and outstanding as of Sept. 9, 2005.

As reported in the Troubled Company Reporter on Sept. 23, 2005,net income for the second quarter of fiscal 2006 increased to$8.4 million, compared to a net loss of $12.7 million in the prioryear quarter. This year's results include an $11.0 million chargeto purchase stock options from the Company's former Chairman ofthe Board of Directors who retired during the quarter. Prior yearresults included $22.3 million of charges primarily related tolegal settlements and early debt extinguishment.

CKE Restaurants, Inc., through its subsidiaries, franchisees andlicensees, operates some of the most popular U.S. regional brandsin quick-service and fast-casual dining, including the Carl'sJr.(R), Hardee's(R), La Salsa Fresh Mexican Grill(R) and GreenBurrito(R) restaurant brands. The CKE system includes more than3,200 locations in 44 states and in 13 countries. CKE is publiclytraded on the New York Stock Exchange under the symbol "CKR" andis headquartered in Carpinteria, California.

* * *

As reported in the Troubled Company Reporter on July 13, 2005,Standard & Poor's Ratings Services raised its ratings on quick-service restaurant operator CKE Restaurants Inc. The corporatecredit and senior secured debt ratings were raised to 'B+' from'B', and the subordinated debt rating was elevated to 'B-' from'CCC+'. The outlook is stable.

COLLEGE PROPERTIES: Brian Mullen Named as Chapter 11 Trustee------------------------------------------------------------The Honorable Charles G. Case II approved the request of the U.S.Trustee for Region 14 to appoint a chapter 11 trustee to takecontrol of College Properties 1 & 2 Limited Partners'restructuring.

The U.S. Trustee reports that he consulted with these parties-in-interest regarding the appointment of Brian Mullen to serve as theChapter 11 Trustee:

Headquartered in Phoenix, Arizona, College Properties 1 & 2Limited Partners filed for chapter 11 protection on June 3, 2005(Bankr. D. Ariz. Case No. 05-10095). John T. Ryan, Esq., ofPhoenix, Arizona, represents the Debtor in its restructuringefforts. When the Debtor filed for protection from its creditors,it estimated assets and debts between $1 million to $10 million.

COLLINS & AIKMAN: Resolves GECC's Objection to Access Agreement---------------------------------------------------------------The U.S. Bankruptcy Court for the Eastern District of Michiganapproved the stipulation resolving General Electric CapitalCorporation's objection to the inclusion of Collins & AikmanCorporation's Hermosillo facility in an exhibit to an AccessAgreement.

The Bankruptcy Court had approved a Customer Financing Agreementbetween the Debtors and certain Original Equipment Manufacturercustomers and a related Access Agreement on August 11, 2005, thatgives the Customers the right to access and take control over theDebtors' facilities for the Customers' sole benefit.

The Stipulation clarifies that none of the Customer FinancingOrder, the Customer Agreement, the Access Agreement nor anyrelated agreement in any way affects the rights of GECC or GEMexico with regard to an existing Construction Agency Agreement.This includes, without limitation, any right GE Mexico has toprohibit Ford or any other third party from operating theequipment at the Hermosillo facility without GE Mexico's consent.

Construction Agency Agreement

Collins & Aikman Automotive Hermosillo, S.A. de C.V., a Mexicansociedad anonima de capital variable, and GE Capital De Mexico,S. de R.L. de C.V., a Mexican sociedad de responsabilidad Limitadade capital variable, are parties to a Construction AgencyAgreement on November 8, 2004, for the construction and operationof an automotive facility in Hermosillo, Mexico.

Although the Debtors and Ford Motor Company intended that theAccess Agreement would extend to the Hermosillo, Mexico facility,GECC and GE Mexico did not understand that the Access Agreementwould grant access to Ford with respect to the Hermosillofacility.

GECC informed the Debtors and Ford that it intended to object tothe inclusion of the Hermosillo facility in an exhibit to theAccess Agreement. The Debtors and Ford explained that it wasalways their understanding that the Hermosillo facility wassupposed to be included on the exhibit to the Access Agreement.

Headquartered in Troy, Michigan, Collins & Aikman Corporation-- http://www.collinsaikman.com/-- is a global leader in cockpit modules and automotive floor and acoustic systems and is a leadingsupplier of instrument panels, automotive fabric, plastic-basedtrim, and convertible top systems. The Company has a workforce ofapproximately 23,000 and a network of more than 100 technicalcenters, sales offices and manufacturing sites in 17 countriesthroughout the world. The Company and its debtor-affiliates filedfor chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. CaseNo. 05-55927). When the Debtors filed for protection from theircreditors, they listed $3,196,700,000 in total assets and$2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News,Issue No. 15; Bankruptcy Creditors' Service, Inc., 215/945-7000)

COLLINS & AIKMAN: Inks Customer Financing Agreement with OEMs-------------------------------------------------------------As reported in the Troubled Company Reporter, Collins & AikmanCorporation and its debtor affiliates obtained approval from theU.S. Bankruptcy Court for the Eastern District of Michigan toenter into a Customer Financing Agreement with certain OriginalEquipment Manufacturer customers that provided them with, amongother things, $82.5 million in immediate price increases, $82.5million in additional financing and a definitive timetable for therenegotiation of contracts.

Pursuant to the Customer Financing Agreement, the Debtorsestablished an aggressive schedule for the analysis andrenegotiation of unprofitable contracts with their customers.Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York,relates that to accomplish this task, the Debtors' seniormanagement and advisors dedicated extensive resources to the taskof identifying the product lines they manufacture for theircustomers and determining the profitability and strategic benefitof each of those product lines. This required a detailed andextensive analysis of numerous contracts.

As a result of their analyses, the Debtors determined that many ofthe Contracts under their current terms and conditions were nolonger economical, profitable or beneficial to ongoingoperations. Mr. Schrock explains that the Contracts containedunfavorable pricing, payment or raw materials pricing terms anddid not provide any ongoing benefits to the Debtors' estatessufficient for them to justify continuing to honor theirobligations thereunder. The terms precluded the Debtors fromgenerating any profit, or in some cases, sufficient profitrelative to the risks involved, which caused the Debtors tocontinue to suffer significant financial losses, Mr. Schrocksays.

To stem the incurrence of those losses, the Debtors negotiatedpricing and payment terms under the Contracts and other benefitsrelevant to their relationship with the Customers to a level thatwould justify continued performance under the Contracts. As aresult of the negotiations, the Debtors have reached an agreementwith each of these Customers:

The Debtors believe that the terms of the Agreements will achievesubstantial benefits to their ongoing business operations andestates.

The basic terms of the Agreements include:

(a) increases in interim or permanent pricing terms for certain or all programs;

(b) the Customers' commitment not to re-source for a certain period;

(c) continued acceleration of payment terms; and

(d) certain confidential, customer-specific terms that inure to the benefit of the Debtors' estates.

According to Mr. Schrock, much of the Debtors' liquidity problemsare exacerbated by the business model of "Tier 1" suppliers tothe automotive industry, which requires that the supplier advancecertain capital expenditures, launch costs and tooling costsmonths, or even years, prior to recovering those costs from thecustomer once component parts are ready to ship. The Customers'willingness to continue funding capital expenditures, launchcosts and tooling for a certain period could greatly improve theDebtors' liquidity, Mr. Schrock notes.

"The Agreement a major accomplishment that provides immenselyvaluable benefits to the Debtors' estates, the Agreementdemonstrates that the Debtors and the Customer are willing towork together to try to find a consensual resolution andreorganize the Debtors' operations," Mr. Schrock says. "Indeed,the Agreement is necessary for the Debtors to achieve stabilityand have a reasonable prospect of a stable business environment,which will maximize value for these estates through a plan ofreorganization or sale."

The Debtors also seek permission to file copies of the termsheets under seal. Each Term Sheet includes specific pricinginformation that, if revealed to the Debtors' competitors, wouldgive the competitors an advantage in negotiating terms with theCustomer. In addition, if the Customer's other suppliers knewthe terms of the Agreement, this would provide the suppliers witha competitive advantage in negotiating contracts with theCustomer. By harming the Customer, revealing the terms of theAgreement would also harm the Debtors' relationship with theCustomer, and consequently, the Debtors' reorganization efforts.

JPMorgan Responds

Under the final order approving the DIP Financing Agreement, thestipulated principal amount of the bank debt owing to theprepetition secured lenders is about $748 million. That seniorindebtedness is secured by liens and security interests held byJPMorgan Chase Bank, N.A., as administrative agent for theprepetition senior secured lenders, on substantially all of theprepetition assets of the Debtors' estates. Thus, thePrepetition Secured Lenders are the predominant creditorconstituency in the Debtors' Chapter 11 cases, Brendan G. Best,Esq., at Dykema Gossett PLLC, Detroit, Michigan, tells the Court.

JPMorgan's legal and financial advisors have had an opportunityto review the term sheets entered into by the Debtors and theirprincipal Original Equipment Manufacturer customers. Mr. Bestrelates that while JPMorgan believes that the Debtors have madesignificant progress in their negotiations with the OEMs, thereremains a looming and significant liquidity concern that theCourt should require the Debtors and the OEMs to address throughmodification of the Term Sheets, as a condition to the Court'sapproval.

Under the Customer Financing Agreement, the OEMs agreed that "theCustomers' respective payment terms will be 'instant net' (net 5days) or equivalent terms." In their current form, the TermSheets fail to provide for the continuation of these criticalpayment terms beyond March 31, 2006. Thus, absent modificationof the Term Sheets, not later than March 31, 2006, the Debtorspotentially face an increase in their working capitalrequirements in an amount estimated by JPMorgan's financialadvisor to be between $150 to $175 million.

Mr. Best notes that it is readily apparent that the Debtors lackany source to fund a massive increase in working capital. As acondition to approval of the Term Sheets, Mr. Best suggests thatthe Court should require the OEMs and the Debtors to avert apotential liquidity crisis by agreeing that the critical "net5-day" payment terms be continued through the conclusion of theDebtors' Chapter 11 cases.

In addition, JPMorgan notes that under the "Protocol for CustomerFunding of Capital Expenditure, Launch and Tooling Costs" betweenthe Debtors and the OEMs, the Debtors are having difficultyobtaining payments on purchase orders for in-house tooling workperformed by the Debtors for the benefit of the OEMs. TheDebtors' inability to obtain timely payments for in-house toolingis having a significant negative impact on the Debtors'liquidity.

The Debtors have informed JPMorgan that they are attempting tonegotiate an addendum to the Protocol to address the promptcollection of in-house tooling payments from the OEMs. The Courtshould require the Debtors and the OEMs to reach a satisfactoryaddendum to the Protocol as a condition to approval of theMotions, Mr. Best says.

Absent JPMorgan's consent, Mr. Best argues that the Debtors andthe OEMs do not have the ability to agree to any terms thatinterfere with the liens and security interests held by JPMorganfor the benefit of the Prepetition Secured Lenders.

Accordingly, JPMorgan asks the Court to condition the approval ofthe Motions upon the modification of the agreements reachedbetween the Debtors and the OEMs to:

(i) require the OEMs to continue to adhere to the previously agreed payment terms for component parts of "'net instant' (net 5 days) or equivalent terms" throughout the duration of the Debtors' Chapter 11 cases; and

(ii) resolve the liquidity problems associated with the collection of in-house tooling payment orders under the Protocol.

Headquartered in Troy, Michigan, Collins & Aikman Corporation-- http://www.collinsaikman.com/-- is a global leader in cockpit modules and automotive floor and acoustic systems and is a leadingsupplier of instrument panels, automotive fabric, plastic-basedtrim, and convertible top systems. The Company has a workforce ofapproximately 23,000 and a network of more than 100 technicalcenters, sales offices and manufacturing sites in 17 countriesthroughout the world. The Company and its debtor-affiliates filedfor chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. CaseNo. 05-55927). When the Debtors filed for protection from theircreditors, they listed $3,196,700,000 in total assets and$2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News,Issue No. 15; Bankruptcy Creditors' Service, Inc., 215/945-7000)

COLLINS & AIKMAN: Proposes Cross-Border Insolvency Protocol-----------------------------------------------------------Collins & Aikman Corporation and its debtor-affiliates ask theU.S. Bankruptcy Court for the Eastern District of Michigan toapprove a cross-border insolvency protocol to facilitate theefficient administration of their Chapter 11 cases and theadministrative proceedings of their European units.

As previously reported, the Debtors' European units commencedadministration proceedings before the Companies Court of the HighCourt of Justice, Chancery Division in London, England inaccordance with the English Insolvency Law. The English Courthas appointed, among others, Simon Appell and Alastair Beveridgeat Kroll Talbot Hughes, also known as Kroll Ltd., as jointadministrators of the European Debtors. In an administration inEngland, the administrators act for the debtors as their agentwith a fiduciary duty to creditors and parties-in-interest.

Marc J. Carmel, Esq., at Kirkland & Ellis LLP, in New York,explains that the Protocol will ensure that the counsel, retainedprofessionals and management for each of the U.S. Debtors and theEuropean Debtors work cooperatively and effectively with minimalfriction or duplication of efforts. The Administrators haveapproved the Protocol and have had the Protocol approved by theEnglish Court.

Although the Protocol has not yet been formally approved, theDebtors have been acting in accordance with the terms of theProtocol since it was developed on July 15, 2005. The OfficialCommittee of Unsecured Creditors has been kept apprised at alltimes regarding the development and terms of the Protocol.

Given the complex nature of the Insolvency Proceedings, Mr.Carmel asserts that a protocol is required to facilitate theefficient administration of the Debtors' cases. There are 38U.S. Debtors and 24 European Debtors, with a total of 23,000employees and operations covering nearly a dozen countries. Inaddition, having two parallel proceedings with jurisdictionalissues like intercompany creditors and intercompany, cross-borderdebt further substantiates the need for a cross-border protocol.A protocol will help protect the rights of the Debtors and theAdministrators, as well as the rights of creditors and otherinterested parties in the United States, England and othercountries.

The terms of the Protocol are designed to:

(a) promote the orderly and efficient administration of the Insolvency Proceedings;

(b) harmonize and coordinate activities undertaken and information exchanged in connection with the Insolvency Proceedings;

(c) honor the independence and integrity of the US and English Courts; and

(d) promote international cooperation and respect for comity among the U.S. and English Courts.

Mr. Carmel says that the Protocol is designed to accomplish thesegoals while attempting to harmonize certain potentiallyconflicting concepts existing under the Bankruptcy Code andEnglish Insolvency Law. Mr. Carmel assures the Court that theProtocol is the result of lengthy discussion and negotiationbetween the Debtors and the Administrators to balance the twodifferent insolvency regimes while continuing to respect theindependent jurisdiction of each of the Courts, all with a viewtoward maximizing the value of the Debtors' estates for thebenefit of their creditors and other parties-in-interest.

Headquartered in Troy, Michigan, Collins & Aikman Corporation-- http://www.collinsaikman.com/-- is a global leader in cockpit modules and automotive floor and acoustic systems and is a leadingsupplier of instrument panels, automotive fabric, plastic-basedtrim, and convertible top systems. The Company has a workforce ofapproximately 23,000 and a network of more than 100 technicalcenters, sales offices and manufacturing sites in 17 countriesthroughout the world. The Company and its debtor-affiliates filedfor chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. CaseNo. 05-55927). When the Debtors filed for protection from theircreditors, they listed $3,196,700,000 in total assets and$2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News,Issue No. 15; Bankruptcy Creditors' Service, Inc., 215/945-7000)

CONSTELLATION BRANDS: Earns $98.1 Million in Second Quarter-----------------------------------------------------------Constellation Brands, Inc. (NYSE: STZ, ASX: CBR) reported netsales of $1.2 billion for the second quarter of fiscal 2006, up15% over prior year.

"Strong performance by our U.S. branded wine and imported beersbusinesses, together with the addition of Robert Mondavi brands,resulted in another solid quarter of financial performance,"stated Richard Sands, Constellation Brands chairman and chiefexecutive officer.

Net sales for the second quarter of fiscal 2006 included$110.2 million from sales of brands from the December 2004acquisition of The Robert Mondavi Corporation and $11.8 millionfrom sales of Ruffino brands. In December 2004, the companypurchased a 40 percent interest in Ruffino S.r.l. and onFeb. 1, 2005, the company began distributing Ruffino's products inthe United States. Excluding Robert Mondavi and Ruffino brands,net sales grew three percent.

"While this growth was a little lower than expected, it reflectstougher trading conditions in the U.K. market, impacting both ourU.K. wholesale and branded business," stated Mr. Sands. "We areaddressing this by focusing on margin improvements in other areasof our business."

Operating income, as reported under generally accepted accountingprinciples, totaled $174.2 million, for the second quarter offiscal 2006, or 14.6 percent of net sales, compared with$156.2 million or 15.1 percent of net sales for the second quarterof fiscal 2005. Reported net income for the second quarterincreased two percent to $82.4 million, while diluted earnings pershare for the second quarter totaled $0.34 compared with $0.35 forthe prior year second quarter. Second quarter fiscal 2006 dilutedearnings per share were impacted by additional shares outstanding.

Second quarter fiscal 2006 and 2005 reported results includeacquisition-related integration costs, restructuring and relatedcharges and unusual items. Net income and diluted earnings pershare, on a comparable basis, exclude these costs, charges anditems. Second quarter operating income, on a comparable basis,was $197.0 million or 16.5 percent of net sales, compared with$158.3 million or 15.3 percent for the prior year period. Secondquarter net income and diluted earnings per share, on a comparablebasis, increased 20 percent to $98.1 million and 17 percent to$0.41.

"We are pleased by the excellent operating margin expansion in thequarter," stated Mr. Sands. "The margin expansion and solidbottom line performance were driven by true growth in the rightcategories, and demonstrates the benefits of our diversifiedproduct portfolio and geographic markets."

"During the second quarter of our fiscal 2006 the price ofpetroleum products moved into uncharted territory, tragic andsenseless terrorist attacks rocked London and Hurricane Katrinaravaged the U.S. Gulf Coast. Our hearts go out to those impactedby these adversities. While these current events could havebecome distractions, Constellation's 8,500 employees around theworld remained focused on delivering results and additional truegrowth opportunities to increase shareholder value," stated Mr.Sands. "We believe that in turbulent times the best course isalways a steady one."

Outlook

Full-year guidance includes these assumptions:

* Consolidated net sales growth in the mid-teens, including the benefit of 10 additional months of Robert Mondavi;

* Interest expense in the range of $190-$195 million;

* Tax rate of approximately 33 percent on a reported basis, which includes a benefit of three percent as a result of adjustments to income tax accruals in connection with the completion of various income tax examinations, and 36 percent on a comparable basis, which excludes the aforementioned three percent benefit;

* Approximately 240 million weighted average diluted shares.

* Cash provided by operating activities in the range of $380 to $400 million;

As reported in the Troubled Company Reporter on Oct. 4, 2005,Moody's Investors Service placed the long-term ratings ofConstellation Brands, Inc. under review for possible downgrade andlowered the company's speculative grade liquidity rating to SGL-2from SGL-1. The review of Constellation's long-term ratingsfollows its announcement that it has offered to purchase all ofthe outstanding common shares of Vincor International Inc. in atransaction currently valued at approximately C$1.4 (US$1.2)billion, including approximately C$305 (US$260) million of assumedVincor net debt.

Ratings placed on review for possible downgrade:

* Ba2 corporate family rating formerly senior implied rating)

* Ba2 on the $2.9 billion senior secured credit facility consisting of a $500 million revolver, $600 million tranche A term loans and $1.8 billion tranche B term loans

* Ba2 $200 million 8.625% senior unsecured notes, due 2006

* Ba2 $200 million 8% senior unsecured notes, due 2008

* Ba2 GBP 80 million 8.5% senior unsecured notes, due 2009

* Ba2 GBP 75 million 8.5% senior unsecured notes, due 2009

* Ba3 $250 million 8.125% senior subordinated notes, due 2012

Rating lowered:

* Speculative grade liquidity rating to SGL-2 from SGL-1

As reported in the Troubled Company Reporter on Oct. 4, 2005,Standard & Poor's Ratings Services placed its 'BB' corporatecredit rating and other ratings on beverage alcohol producer anddistributor Constellation Brands Inc. on CreditWatch with negativeimplications.

DELPHI CORP: Names Robert Dellinger as Chief Financial Officer--------------------------------------------------------------The Board of Directors of Delphi Corp. (NYSE: DPH) named Robert J.Dellinger as the company's executive vice president and chieffinancial officer effective immediately. Mr. Dellinger, 45, mostrecently was the executive vice president and chief financialofficer for Sprint Corp. He succeeds John D. Sheehan, who wasnamed Delphi's vice president and chief restructuring officer andhad served as acting CFO since March 4, 2005. Mr. Sheehan willretain his responsibilities as chief accounting officer andcontroller on an interim basis but his primary focus will be onleading Delphi's restructuring activities. Both Messrs. Dellingerand Sheehan will be members of the Delphi Strategy Board, thecompany's top policy-making group.

"Bob's sound financial judgment, international experience andstrength of leadership will be critical as we move ahead with ourglobal transformation," said Robert S. "Steve" Miller, Delphi'schairman and chief executive officer. "John's leadership asacting CFO has been vital during this transition time and he willbring the necessary focus to Delphi's restructuring efforts in hisnew role."

Prior to joining Sprint in June 2002, Mr. Dellinger was presidentand chief executive officer of GE Frankona Re based in Munich,Germany, with responsibility for General Electric's(GE) EmployersReinsurance Corporations (ERC) European and Asian operations. Inhis 19-year career at GE, he had diverse financial and operationalexperiences in both industrial and financial services. In March1997, he was named an officer of GE and executive vice presidentand chief financial officer of ERC. He served as manager offinance for GE Motors and Industrial Systems from 1995 to 1997 andwas director of finance and business development for GE PlasticsPacific based in Singapore from 1993 to 1995. He spent five yearson the GE Corporate Audit Staff and completed the GE FinancialManagement Program.

Mr. Dellinger graduated from Ohio Wesleyan University in 1982 witha bachelor of arts in economics and a minor in accounting. Heserves on the board of directors of SIRVA, Inc., a NYSE- listedcompany.

Headquartered in Troy, Michigan, Delphi Corp. -- http://www.delphi.com/-- is the single largest global supplier of vehicle electronics, transportation components, integrated systemsand modules, and other electronic technology. The Company'stechnology and products are present in more than 75 millionvehicles on the road worldwide. The Company filed for chapter 11protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No.05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., andRon E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP,represents the Debtors in their restructuring efforts. As ofAug. 31, 2005, the Debtors' balance sheet showed $17,098,734,530in total assets and $22,166,280,476 in total debts.

DELTA AIR: Brings In BSI LLC as Claims Agent--------------------------------------------Edward H. Bastian, executive vice president and chief financialofficer of Delta Air Lines, Inc., relates that the thousands ofcreditors and other parties-in-interest involved in the Debtors'Chapter 11 cases may impose heavy administrative and other burdenson the Court and the Office of the Clerk of the Court.

To relieve the Clerk's Office of these burdens, Delta Air LinesInc. and its debtor-affiliates asks permission from the U.S.Bankruptcy Court for the Southern District of New York to engageBankruptcy Services LLC as notice agent and claims agent in theirChapter 11 cases.

According to Mr. Bastian, BSI is one of the country's leadingChapter 11 administrators with experience in noticing, claimsprocessing, claims reconciliation and distribution. BSI hassubstantial experience in the matters upon which it is to beengaged. BSI has acted or is acting as official notice agent andclaims agent in recent notable cases including EnronCorp., WorldCom Inc., Global Crossing, Ltd., AdelphiaCommunications Corporation and Bethlehem Steel Corp.

* a notice of the Petition Date and the initial meeting of creditors under Section 341(a) of the Bankruptcy Code;

* a notice of the claims bar date;

* notices of objections to claims;

* notices of any hearings on a disclosure statement and confirmation of a plan or plans of reorganization; and

* other miscellaneous notices as the Debtors or the Court may deem necessary or appropriate for an orderly administration of the Debtors' Chapter 11 Cases;

(b) after the mailing of a particular notice, file with the Clerk's Office a certificate or declaration of service that includes a copy of the notice involved, an alphabetical list of persons to whom the notice was mailed and the date and manner of mailing;

(c) maintain copies of all proofs of claim and proofs of interest filed;

(d) maintain official claims registers;

(e) implement necessary security measures to ensure the completeness and integrity of the claims registers;

(f) transmit to the Clerk's Office a copy of the claims registers on a weekly basis, unless requested by the Clerk's Office on a more or less frequent basis;

(g) maintain an up-to-date mailing list for all entities that have filed a proof of claim or proof of interest, which list will be available upon request of a party in interest or the Clerk's Office;

(h) provide access to the public for examination of copies of the proofs of claim or interest without charge during regular business hours;

(i) record all transfers of claims and provide notice of the transfers in accordance with Rule 3001(e) of the Federal Rules of Bankruptcy Procedure;

DELTA AIR: Appoints Domenico De Sole as New Director----------------------------------------------------Delta Air Lines (NYSE:DAL) reported the election of Domenico DeSole to its Board of Directors, effective immediately.

"We are delighted that Domenico De Sole is joining Delta'sBoard of Directors," said Jerry Grinstein, Delta's ChiefExecutive Officer. "He possesses a wealth of experience that willbe very beneficial to Delta's Board."

Mr. De Sole, 61, served as the President and Chief ExecutiveOfficer of Gucci Group, N.V., and Chairman of the Group'sManagement Board from 1995 to 2004, where he played a leading rolein reestablishing the exclusivity and profitability of theGucci brand. He joined Gucci in 1984 as Chief Executive Officerof Gucci America and in 1994 became Chief Operating Officer ofGucci Group. Prior to joining Gucci, Mr. De Sole was a partnerwith the law firm Patton, Boggs L.L.P. Mr. De Sole is a graduateof the University of Rome with a Law degree and earned a Master'sDegree from Harvard Law School.

Mr. De Sole serves on the Board of Directors of Bausch & Lomb,Incorporated, The Gap, Inc., TelecomItalia S.p.A. and is a memberof the Harvard Law School Advisory Board.

DELTA AIR: NYSE to Halt Common Stock Trading on Thursday, Oct. 13-----------------------------------------------------------------Delta Air Lines has been advised by the New York Stock Exchange(NYSE) that its common stock -- ticker symbol DAL -- and its8-1/8% Notes due July 1, 2039 -- ticker symbol DNT -- will besuspended from trading on the NYSE on Thursday, Oct. 13, 2005, andthat the NYSE will submit an application to the Securities andExchange Commission to delist these securities.

Delta received written notification from the NYSE on Oct. 4, 2005,that the average closing price of Delta's common stock fell belowthe NYSE's continued listing minimum share price standard of $1.00over a consecutive 30-trading-day period as of Oct. 3, 2005. Thiscondition subjected Delta's securities to the NYSE's suspensionand delisting procedures.

Delta has informed the NYSE that, due to its recent Chapter 11filing, it does not intend to attempt to cure this deficiency andwill not oppose the suspension and delisting of its common stockand its 8-1/8% Notes due July 1, 2039. The Company expects thesesecurities to be delisted from the NYSE upon approval by theSecurities and Exchange Commission. Once suspended from tradingon the NYSE, Delta's securities may be quoted in the "over-the-counter" market.

Delta cannot predict what the ultimate value of its securities maybe or whether security owners should expect any financial recoveryin Delta's Chapter 11 proceedings. However, in most Chapter 11cases, owners of equity securities receive little or no recoveryof value from their investment. As a result, Delta urges thatappropriate caution be exercised with respect to existing andfuture investments in Delta's securities.

Headquartered in Atlanta, Georgia, Delta Air Lines -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier acrossthe Atlantic, offering daily flights to 502 destinations in 88countries on Delta, Song, Delta Shuttle, the Delta Connectioncarriers and its worldwide partners. The Company and 18affiliates filed for chapter 11 protection on Sept. 14, 2005(Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner,Esq., at Davis Polk & Wardwell, represents the Debtors in theirrestructuring efforts. As of June 30, 2005, the Company's balancesheet showed $21.5 billion in assets and $28.5 billion inliabilities.

DELTAGEN INC.: Plan Confirmation Hearing Set for November 14------------------------------------------------------------The U.S. Bankruptcy Court for the Northern District of Californiain San Francisco conditionally approved the Disclosure Statementexplaining the Joint Plan of Reorganization of Deltagen, Inc., andDeltagen Proteomics, Inc.

With a court-approved Disclosure Statement in hand, the Debtorscan now solicit acceptances of its Plan from their creditors.Ballots accepting or rejecting the Joint Plan must be returned tothe balloting agent designated on the ballots by Nov. 7, 2005.

A combined hearing to consider final approval of the DisclosureStatement and confirmation of the Joint Plan will be held beforethe Hon. Dennis Montali at 9:30 a.m. on Nov. 14, 2005.

Objections to the final approval of the Disclosure Statement orconfirmation of the Joint Plan must be filed with the BankruptcyCourt by Nov. 7., 2005. Copies of any objections must be servedby first class mail on:

As reported in the Troubled Company Reporter, the Debtors' JointPlan effectuates a reorganization of Deltagen and the liquidationof Deltagen Proteomics.

Following confirmation, Deltagen will emerge from bankruptcy as areorganized company and will continue to conduct business as atools and service vendor of knockout mouse data and materials.

Deltagen anticipates paying its Creditors in full on or soon afterthe Effective Date of the Plan out of existing Cash. Deltagen'sshareholders will retain their interests in the Reorganized Debtorunaffected.

The Plan provides for the immediate liquidation of DPI and itsseparate assets and the distribution of the net proceeds to DPI'sseparate creditors. DPI will then dissolve under applicablenon-bankruptcy law. The interests in DPI, which are currentlyheld solely by Deltagen, will be extinguished.

DELTAGEN INC: Administrative Claims Bar Date Set on November 7--------------------------------------------------------------The U.S. Bankruptcy Court for the Northern District Of Californiain San Francisco set Nov. 7, 2005, as the deadline for filingrequests for the allowance and payment of administrative expenseclaims arising after June 27, 2003, in connection with DeltagenInc.'s bankruptcy case.

The Court also set Nov. 7, 2005, as the deadline for filingRequests for the allowance and payment of administrative expenseclaims arising after May 19, 2004, in connection with DeltagenProteomics, Inc.'s bankruptcy case.

Each payment application must be specifically designated as anAdministrative Expense Request and must be filed with:

The Clerk of the U.S. Bankruptcy Court Northern District Of California, San Francisco Division 235 Pine Street, 19th Floor San Francisco, California 94104

* is evidenced by a secured promissory note, * bears interest at 10.0% per annum, and * is secured by a security interest in substantially all of the Company's assets.

Principal and any accrued but unpaid interest under the securedpromissory note is due and payable upon demand by Optel at anytime after December 31, 2005.

The entire unpaid principal amount of the loan, together withaccrued but unpaid interest, will become immediately due andpayable upon demand by Optel at any time on or following theoccurrence of any of these events:

(a) the sale of all or substantially all of the Company's assets or, subject to certain exceptions, any merger or consolidation of the Company with or into another corporation;

(b) the inability of the Company to pay its debts as they become due;

(c) the dissolution, termination of existence, or appointment of a receiver, trustee or custodian, for all or any material part of the property of, assignment for the benefit of creditors by, or the commencement of any proceeding by the Company under any reorganization, bankruptcy, arrangement, dissolution or liquidation law or statute of any jurisdiction, now or in the future in effect;

(d) the execution by the Company of a general assignment for the benefit of creditors;

(e) the commencement of any proceeding against the Company under any reorganization, bankruptcy, arrangement, dissolution or liquidation law or statute of any jurisdiction, now or in the future in effect, which is not cured by the dismissal thereof within 90 days after the date commenced; or

(f) the appointment of a receiver or trustee to take possession of the property or assets of the Company.

As of June 30, 2005, Digital Lightwave's equity deficit widened to$42,616,000 from a $29,146,000 deficit at Dec. 31, 2004.

DOANE PET: Moody's Junks $150 Million Senior Subordinated Notes---------------------------------------------------------------Moody's Investors Service concluded its review of Doane Pet Care,Inc. for possible upgrade that commenced on August 25th byupgrading Doane's corporate family rating and existing $213million 10.75% senior unsecured notes to B2 from B3. In addition,Moody's assigned a B1 rating to Doane's new proposed seniorsecured credit facilities, and a Caa1 rating to its new proposedsenior subordinated notes.

Moody's also upgraded Doane's existing senior secured bankfacilities to B1 from B2, its existing senior subordinated notesto Caa1 from Caa2, and its existing mandatory redeemable preferredstock from Ca to Caa3. Ratings on the existing bank facilitiesand preferred stock will be withdrawn when the expectedacquisition transaction closes. The outlook on the ratings isstable.

The upgrade and rating assignments are in relation to the pendingacquisition of Doane's parent company -- Doane Pet CareEnterprises, Inc. -- by Teachers' Private Capital for $840 millionplus $20 million of expenses. As part of the transaction,Teachers will contribute sufficient equity capital to moderatelyreduce Doane's leverage to more manageable levels.

The refinancing of existing debt will also increase Doane'sfinancial flexibility and stabilize a precarious capital structurewhich includes a significant amount of debt and preferred stockwhich otherwise would begin maturing in early 2007. The ratingsare based upon the expectation that the acquisition by Teachers'and the planned debt reductions are consummated as proposed.

Moody's considered Doane's ratings in relation to certain keyrating drivers for the food industry.

1) Scale and diversification. Doane is a moderate sized manufacturer, concentrating in private label pet food, with sales and earnings highly concentrated among a small number of products and customers largely in the US but with some exposure in Europe. Sales are particularly concentrated with Wal-Mart which accounts for approximately 43% of revenues.

2) Franchise strength and growth potential. Doane's franchise strength is moderate. While it has a solid position with a concentrated customer group, it operates within a rather specialized industry niche and remains vulnerable to competitive threats from larger more powerful food companies. Internal growth has been solid over the recent past, and given its size, additional growth potential exists.

3) Distribution environment and pricing flexibility with customers. The company's use of contracts with its customers helps moderate -- but does not eliminate -- the impact of commodity cost fluctuations.

4) Assessment of cost efficiency and profitability. Doane's margins and return on assets are low relative to many companies in the food industry.

Given capital expansion plans, Moody's does not expect majorimprovements in these over the rating horizon.

Doane's ratings are limited by its leverage which -- althoughimproved following the acquisition by Teachers' -- will remainhigh. Moody's expects Doane to once again begin pursuingacquisitions and internal growth in the years ahead. As a result,Moody's expects free cash flow to remain limited relative to debt,even with some expected earnings improvement. As a result,further leverage improvements are likely to be limited.

The ratings also consider Doane's exposure to:

* volatile commodity input, * packaging, and * fuel costs.

While contracts negotiated with customers over the past yearprovide a mechanism to pass through a portion of commodity costchanges (upward and downward), Moody's believes the company stillfaces some practical limits on pricing flexibility in the highlycompetitive pet food segment. The company's products compete withthe national brands of some of the nation's largest food andconsumer products companies, which have substantial resources andfinancial flexibility. These companies have higher margins ontheir branded products than Doane and may choose not to pass oncost increases to gain market share. If private label priceincreases outpace branded price increases, narrowing the gapbetween branded and private label product prices, private labelvolumes can be negatively impacted, as they were during FY04.And, when commodity input costs fall, Wal-Mart and other largefood retailers are likely to look for price decreases or othersupport from their branded and private label suppliers, which mayrestrain the extent of Doane's ability to significantly improvemargins and sustain volume growth in a more favorable costenvironment.

Doane's ratings gain material support from:

* its dominant position in the US private label dry pet food market;

* the large scale of its dry pet food manufacturing operations;

* its distribution reach; and

* the strength of its relationship with Wal-Mart.

Doane is the leading manufacturer of private label pet food,supplying 65% of private label dry volume in the US, and is thesecond largest manufacturer of dry pet food in the US, with over20% volume share of the market. The company has had a long-standing relationship with Wal-Mart and Sam's Club, which accountfor about 43% of Doane's sales. Doane's business with Wal-Mart issupported by closely tied logistics and an infrastructurepositioned to efficiently supply key products, including Wal-Mart's Ol' Roy dog food, the largest selling pet food brand byvolume in the US.

Doane's ratings also take into account the company's success inmoving contracts with its major customers over the past year to aform that shares, on average 50%, of commodity cost movements,which enabled price increases during FY04 and should help reducevolatility going forward. In addition, the ratings recognize thatDoane's European operations (about 27% of sales) could be soldwithout negative impact on the company's US business platform andcould provide opportunity for debt reduction and de-leveraging ifsold at a high enough multiple of cash flow.

Doane's pro-forma balance sheet will include a significantcomponent of intangible assets (55%). Low returns on assetssuggest potential for asset write-downs. Pro forma debt of $586million (incorporating Moody's standard analytical adjustments)represents approximately 5.4X LTM EBITDA. Free cash flow afterinterest expense, taxes and capital spending is estimated at about$33 million in FY'06 (first full year following the acquisition)or slightly above 6% of total debt.

The outlook on Doane's ratings is stable. This reflects Moody'santicipation that the company's operating performance will remainsolid, and that it will manage its future growth and financialpolicies in such as way as to maintain its leverage at levelscommensurate with its new ratings. Doane's ratings could bedowngraded if its operating performance falters, or if its futuregrowth strategy involves significant debt-financed acquisitionswhich result in Debt/EBITDA exceeding 5.5X or free cash flow todebt falling below 4% for several quarters. Its ratings couldexperience upward pressure if:

The B1 rating on the senior secured credit facilities is notchedup from the corporate family rating to reflect their preferentialposition in the capital structure. The facilities have upstreamand downstream guarantees and are secured by substantially all thedomestic assets and stock of the company and its domesticsubsidiaries and by 65% of the stock of its foreign subsidiaries.Moody's believes there would be sufficient value for full coverageof outstandings in a distressed scenario.

The B2 rating on the unsecured notes is at the corporate familyrating, reflecting their position in the capital structure,effectively behind the secured credit facilities, butcontractually ahead of the senior subordinated notes. Theunsecured notes also have the benefit of upstream guarantees fromDoane's domestic subsidiaries. Due to change-in-controlprovisions in the senior unsecured notes, Doane is required topublicly tender for these securities at par; however, as the notesare trading at a material premium given their 10.75% coupon.Moody's does not expect a significant portion of the notes to betendered. If they are tendered, Doane is required to replace themwith other senior unsecured debt.

The Caa1 rating on the senior subordinated notes is notched downtwo levels from the corporate family rating to reflect theircontractual subordination to a large amount of senior debt (thesenior secured credit facilities and senior unsecured notes) andMoody's expectation that asset coverage of the subordinated noteswould be weak in a distressed scenario, even with realization of arelatively high value for intangible assets. The subordinatednotes also benefit from upstream guarantees from Doane's domesticsubsidiaries.

The existing redeemable preferred stock is notched down two levelsfrom the senior subordinated notes to reflect the most junior debtposition in the capital structure which is lodged at the holdingcompany and does not benefit from any upstream guarantees.Ratings on the preferred stock will be withdrawn when acquisitiontransaction closes and the preferred is redeemed.

Doane Pet Care, based in Brentwood, Tennessee, is a manufacturerof private label pet food for the US and European markets.

The Trustee wants Joe Adame to assist him in marketing and sellingthe Debtor's four commercial real property located in NuecesCounty, Texas.

Joe Adame will:

(a) prepare marketing materials or offering packages to be used in soliciting prospective purchasers for the properties; and

(b) locate, qualify and furnish potential purchasers of the properties to the Trustee.

James Hoenscheidt, agent for Joe Adame, will be the professionalin charge of marketing the property. Mr. Hoenscheidt disclosesthat the Firm will be paid a 6% commission of the gross saleprice. Should Joe Adame procure a tenant to lease all or part ofthe properties, the Firm will be paid 6% of the rents, to be paideach during the term of the lease.

Mr. Hoenscheidt assures the Court that the Firm does not representany interest adverse to the U.S. Trustee, the Chapter 11 Trusteeor Debtors and its estates.

Headquartered in Corpus Christi, Texas, Dykeswill Ltd., filed forChapter 11 protection on July 26, 2004 (Bankr. S.D. Tex. Case No.04-20974). Harlin C. Womble, Jr., Esq., at Jordan, Hyden Wombleand Culbreth, P.C., represents the Debtor in its restructuringefforts. When the company filed for protection from itscreditors, it listed over $10 million in assets and debts of morethan $1 million.

As reported in the Troubled Company Reporter on Aug. 11, 2005,Harrisdirect will distribute, at closing, approximately$50 million to BMO Financial, resulting in aggregate proceeds ofapproximately $750 million (CDN$910 million).

"The close of the Harrisdirect acquisition marks a milestone inthe evolution of E*Trade Financial," said Mitchell H. Caplan,Chief Executive Officer. "Harrisdirect customers are highlyvaluable, holding a high industry average asset balance. Our goalis to leverage each customer relationship across our integratedplatform of investing, cash, and credit to further strengthen ourfranchise and accelerate our growth goals."

Established in 1817 as Bank of Montreal, BMO Financial Group is ahighly diversified North American financial services organization.With total assets of CDN$292 billion as at April 30, 2005, andmore than 33,000 employees, BMO provides a broad range of retailbanking, wealth management and investment banking products andsolutions. BMO Financial Group serves clients across Canadathrough its Canadian retail arm, BMO Bank of Montreal, and throughBMO Nesbitt Burns, one of Canada's leading full-service investmentfirms. In the United States, BMO serves clients through Chicago-based Harris, an integrated financial services organization thatprovides more than 1.5 million personal, business, corporate andinstitutional clients with banking, lending, investing, financialplanning, trust administration, portfolio management, familyoffice and wealth transfer services.

The E*Trade Financial family of companies provide financialservices including trading, investing, banking and lending forretail and institutional customers. Securities products andservices are offered by E(x)TRADE Securities LLC (MemberNASD/SIPC). Bank and lending products and services are offered byE(x)TRADE Bank, a Federal savings bank, Member FDIC, or itssubsidiaries.

* * *

As reported in the Troubled Company Reporter on Oct. 4, 2005,Standard & Poor's Ratings Services affirmed its 'B+' rating onE*TRADE Financial Corp. as a result of the announcement thatE*TRADE will purchase BrownCo, a discount on-line broker withapproximately 200,000 active customer accounts, from J.P. MorganChase & Co. S&P said the outlook on E*TRADE is stable.

E*TRADE FINANCIAL: Closes on 3-Year $250 Million Credit Facility----------------------------------------------------------------E*Trade Financial Corporation (NYSE: ET) completed a three-year$250 million senior secured revolving credit facility. Thefacility will be used for general corporate purposes which mayinclude the funding of transaction-related expenses and regulatorycapital needs associated with the Company's acquisition ofHarrisdirect and planned acquisition of BrownCo.

"We are pleased to have established a $250 million bank facility,"said Robert J. Simmons, Chief Financial Officer, E*TradeFinancial. "This transaction provides the Company with ongoingaccess to long-term liquidity and improves our financialflexibility."

The E*Trade Financial family of companies provide financialservices including trading, investing, banking and lending forretail and institutional customers. Securities products andservices are offered by E(x)TRADE Securities LLC (MemberNASD/SIPC). Bank and lending products and services are offered byE(x)TRADE Bank, a Federal savings bank, Member FDIC, or itssubsidiaries.

* * *

As reported in the Troubled Company Reporter on Oct. 4, 2005,Standard & Poor's Ratings Services affirmed its 'B+' rating onE*TRADE Financial Corp. as a result of the announcement thatE*TRADE will purchase BrownCo, a discount on-line broker withapproximately 200,000 active customer accounts, from J.P. MorganChase & Co. S&P said the outlook on E*TRADE is stable.

(i) an aggregate 50% partnership interest in Centragas - Transportadora de Gas de la Region Central de Enron Development & Cia., S.C.A., and

(ii) 100% of the equity interest in Enron International Development Services LLC.

Centragas, a non-debtor Colombian partnership, was formed todevelop, own and operate a 359-mile natural gas pipelineextending from Ballena to Barrancabermeja in Colombia.

On May 12, 1994, Centragas entered into a transportation servicescontract with Empresa Colombiana de Petroleos, the state-ownedoil company of Colombia, under which Ecopetrol purported toassign certain rights to Empresa Colombiana de Gas, a state-ownedgas transportation company in 1998. Since that time, Ecogas hasacted as Centragas' functional counterparty under theTransportation Contract. Centragas currently transports gasexclusively for Ecopetrol and Ecogas pursuant to theTransportation Contract. None of the Debtors have been a partyto the Transportation Contract.

On August 31, 2004, consistent with the terms of the Plan,Enron's indirect 42.92% interest in Promigas was transferred toPrisma Energy International Inc., a wholly owned non-debtorsubsidiary of Enron. Accordingly, through Prisma, theReorganized Debtors hold a minority interest in Promigas.

Tomen Corporation owns the remaining 25% limited partnershipinterest in Centragas. Tomen is not affiliated with Enron.Neither Promigas nor Tomen are transferring interests inCentragas to the Purchaser nor are any of their contractualrelationships with Centragas affected by the EPA. None of theReorganized Debtors are parties to the agreements betweenPromigas and Tomen, on the one hand, and Centragas, on the otherhand. Promigas has indicated its consent to the proposed sale.

Brian S. Rosen, Esq., at Weil, Gotshal & Manges LLP, in New York,relates that the Reorganized Debtors anticipate that they willtimely receive Tomen's consent to the proposed sale. The partiesare finalizing the consent documentation. The ReorganizedDebtors and Arctas-Paragon will reimburse Tomen and Promigas forcertain expenses incurred in connection with closing.

Equity Purchase Agreement

A. Sale of Equity Interests

In the fall of 2004, Enron began preparations for a marketing and bidding process with respect to the Equity Interests, including setting up a data room and identifying potential purchasers.

According to Mr. Rosen, the Equity Purchase Agreement negotiated with Arctas-Paragon is the best offer for the Equity Interests.

Pursuant to the Equity Purchase Agreement, each of EDC, ECFI and EIHC will (i) sell the Equity Interests and (ii) assign certain contracts related to the Equity Interests to Arctas- Paragon for an aggregate purchase price of $8,663,600.

Each Seller is allocated a share of the purchase price commensurate with their share of the Equity Interests.

B. Assignment of Centragas Agreements

EDC and ECFL are parties to five prepetition executory contracts, primarily in the form of shareholder or partnership type agreements:

(i) the Partners Agreement, dated September 13, 1994, by and among EDC and the limited partners of Centragas;

(ii) the Agreement Among Partners, dated January 23, 1996, by and among EDC, EPCLP, ECILP, Enron International, Inc., Enron International Development Services, Inc., Enron Pipeline, Colombia G.P., Inc., and Tomen;

(iii) the Agreement as to the Acknowledgment and Performance of Obligations to Restore Loaned Funds, dated Dec. 16, 2002, by and among the Enron Partners and Centragas;

(iv) the Escrow Agreement, dated December 16, 2002, by and among the Enron Partners, Centragas and JP Morgan Chase Bank; and

(v) the Loan Status Agreement, dated December 16, 2002, by and among the Enron Partners, Promigas, Tomen and Centragas.

The Partners Agreement governs Centragas and the disposition of the partnership capital of Centragas. It provides that each of the partners of Centragas:

(1) has the right to withdraw a percentage of available funds from Centragas in an amount equal to the partner's percentage ownership of the partnership capital and

(2) must restore any withdrawn funds to Centragas.

The Agreement Among Partners relates to and governs Tomen's acquisition of a 25% interest in Centragas from EPC and makes the Partners Agreement applicable to Tomen.

In accordance with the Partners Agreement, Centragas loaned funds to Enron Development Funding Ltd., a Reorganized Debtor, and Enron Pipeline Company Argentina S.A. Subsequently, the Enron Partners and Centragas entered into the Acknowledgment Agreement, which sets forth the terms of the Enron Partners' repayment of the Partner Loans. In particular, the Acknowledgment Agreement provides that Centragas will hold any dividends or other distributions that may be or become payable to the Enron Partners in escrow and those amounts will be applied towards the Partner Loans. The Enron Partners pledged to Centragas the rights to receive the dividends or other distributions to secure payment under the Partner Loans.

In furtherance of the Acknowledgment Agreement, the Enron Partners and Centragas entered into the Escrow Agreement, which governs management and disbursement of the dividends and other distributions back to Centragas.

In addition, the Enron Partners, Promigas, Tomen and Centragas executed the Loan Status Agreement, which provides, inter alia, that those parties will refrain from asserting or pursuing any claim of breach or default arising from or relating to the Partner Loans against any party to the Loan Status Agreement or the Acknowledgment Agreement.

To maximize the value of the Equity Interests, in conjunction with confirmation of the Plan, the Reorganized Debtors assumed each of the Centragas Agreements. Except those obligations to be assumed by Arctas-Paragon, all cure obligations were satisfied in conjunction with the assumption of these agreements.

Because the Centragas Agreements generally govern EDC and ECFL's rights and interests in connection with their equity interests in Centragas, pursuant to the EPA, those rights and interests will be assigned to the Purchaser. In accordance with the Plan, the assignment will be free and clear of all liens, claims and encumbrances as of the Effective Date of the Plan.

C. Discharge of Prepetition Obligations

The Plan provides that, as of its Effective Date, the Debtors' assets vest free and clear of all liens, claims and encumbrances in the Reorganized Debtors. The Plan also provides for the discharge of prepetition obligations and a permanent injunction on pursuing prepetition claims.

Accordingly, the Reorganized Debtors will transfer, convey and assign the Equity Interests and the Centragas Agreements to the Purchaser free and clear in accordance with the terms of the Plan.

Among the prepetition obligations discharged pursuant to the Plan are claims arising from:

(a) a guaranty agreement, dated December 16, 1994, pursuant to which Enron guaranteed, for the benefit of The Bank of New York, the performance of EIDS Inc. of its obligations under the Technical Services Agreement between Centragas and EIDS Inc. and

According to Mr. Rosen, the Enron Guaranty and the Enron Hold Agreement were either executory contracts rejected pursuant to the Plan or non-executory agreements giving rise solely to prepetition claims. As of October 6, 2005, no proofs of claim have been filed setting forth claims arising under the Enron Guaranty or the Enron Hold Agreement nor did Enron schedule any claims arising under these agreements.

D. Mutual Release and Indemnification

The parties, including the affiliate of Arctas-Paragon designated to act as the new general partner of Centragas, will enter into a Release and Indemnification Agreement.

The designated general partner and Centragas will unconditionally release and forever discharge the Reorganized Debtors and their affiliates from any liabilities relating to:

(i) the Acknowledgment Agreement or the Partners Loan,

(ii) the Project or

(iii) impairment or damage to the environment for failure to comply with environmental laws.

The Reorganized Debtors will unconditionally release and forever discharge ECILP, Enron Colombia Transportation Ltd., EPCLP and from any and all liabilities, including claims arising out of an any business dealings, intercompany accounts or other arrangements or transactions with Enron, any Seller or any of their affiliates, that existed on or before the closing of the proposed transaction.

E. Noteholder Consent Solicitation

Mr. Rosen relates that a portion of the financing for Centragas was obtained through issuance of $172 million of 10.65% Senior Secured Notes Due 2010 pursuant to an indenture, dated December 8, 1994, between Centragas and the Bank of New York. The Indenture requires that Enron hold at least a 25% interest in Centragas and at least a 51% direct or indirect interest in EDC. In addition, the Indenture requires EDC to remain the general partner of Centragas.

In conjunction with the sale under the EPA, the Sellers have obtained the noteholders' consent to modify the Indenture and eliminate the hold requirements. As is customary, Centragas has agreed to pay a consent fee equal to $1.20 per $1,000 of the face amount of the bonds payable upon consummation of the transaction.

Headquartered in Houston, Texas, Enron Corporation -- http://www.enron.com/-- is in the midst of restructuring various businesses for distribution as ongoing companies to its creditorsand liquidating its remaining operations. Before the companyagreed to be acquired, controversy over accounting procedures hadcaused Enron's stock price and credit rating to drop sharply.

d. the Oregon Attorney General and the Washington Attorney General -- the Additional Claimants.

According to Edward A. Smith, Esq., at Cadwalader, Wickersham &Taft, in New York, the Settlement will avoid future disputes andlitigation concerning the disputes since the parties have agreed,subject to certain restrictions and reservations, to release oneanother from claims, causes of action, obligations andliabilities with respect to the matters addressed in theSettlement. The Settlement will also result in the resolution ofbillions of dollars in claims filed by a number of the SettlingParticipants, California Power Exchange Corporation, and theCalifornia Independent System Operator Corporation.

The material terms of the Settlement are:

A. Monetary Consideration

The Enron Parties will provide monetary consideration, including:

1. the assignment to the California Parties the Enron Parties' rights, title and interest in the first $25,000,000 of certain undistributed funds relating to transactions in the markets of the PX and the ISO currently held by the PX in all its accounts or the reorganized PX holding funds in trust pursuant to the terms of the PX Tariff, ISO Tariff, or a court order;

2. granting the Settling Claimants an allowed Class 6 unsecured claim pursuant to the Plan totaling $875,000,000 against EPMI, without offset, defense or reduction on account of any claim or counterclaim the Enron Parties may have against any of the Settling Claimants;

4. assignment of any refunds or rights to refunds that the Enron Parties have received or will receive from other entities in the refund proceeding conducted before the FERC, or the FERC Refund Related Proceedings, excluding the California Energy Resources Scheduling division of CERS, to the California Parties;

5. assignment to CERS of the Enron Parties' claim for refunds, and related right, title or interest, resulting from any mitigation of sales by CERS of imbalance energy into the ISO real-time market, as well as any interest, surcharges, other charges or payments associated with the sales, that may be payable pursuant to FERC's May 12, 2004 Order on Requests for Rehearing and Clarification and subsequent orders.

B. Non-Monetary Consideration

The Enron Parties also agreed to provide certain non-monetary consideration. Specifically, the Enron Parties agreed to cooperate with the Settling Claimants in the Claimants' pursuit of claims against entities other than the Enron Parties and their affiliates relating to events in the western energy markets or relating to third-party participation in alleged Enron financial misconduct during the Settlement Period.

The Enron Parties have also authorized the PX and the ISO to provide the California Parties any additional information, materials, or data that would otherwise be available to one or more of the Enron Parties and that are related to Enron's sales and purchases in the ISO and PX markets, provided that the California Parties have agreed to maintain the information in confidence and not to disclose it to third-parties, with certain exceptions.

C. Withdrawals, Releases and Waivers

All claims against Enron for the Settlement Period by the Settling Claimants for refunds, disgorgement of profits, or other monetary or non-monetary remedies in the FERC Proceedings will be deemed settled and fully discharged. The FERC Proceedings will not be deemed settled or discharged as to the Non-Settling Participants.

The Enron Parties will, without prejudice to any subsequent action, withdraw all subpoenas they have served in any of the FERC Proceedings against PG&E, SCE, or their employees. Enron and the Settling Claimants will be deemed to reserve and retain all claims and defenses they may have against Non- Settling Participants.

The Settling Claimants will sign and file all documentation necessary to effectuate withdrawal of their Proofs of Claim. Enron will sign any documentation necessary to effect withdrawal of Claim No. 8879 in the PG&E bankruptcy case, in a form and content acceptable to PG&E. All Scheduled Liabilities relating to any of the Settling Claimants will be disallowed in their entirety and each of the Enron Parties will release the Settling Claimants from all claims, obligations, causes of action, liabilities under specified provisions of the Bankruptcy Code.

The Settlement is subject to certain conditions and to finalapproval by the FERC, the Bankruptcy Court and the CPUC.

The Settlement Agreement will clearly benefit the Enron Debtorsand their estates and creditors, Mr. Smith says. The EnronParties believe that the compromise embodied in the Settlement isfair, equitable and reasonable.

Headquartered in Houston, Texas, Enron Corporation -- http://www.enron.com/-- is in the midst of restructuring various businesses for distribution as ongoing companies to its creditorsand liquidating its remaining operations. Before the companyagreed to be acquired, controversy over accounting procedures hadcaused Enron's stock price and credit rating to drop sharply.

On February 21, 2003, Enron commenced an adversary proceedingagainst, among others, Whitewing Associates, L.P., in connectionwith the Osprey Note structure. Enron later filed an amendedcomplaint to include the Claimants as defendants.

On February 26, 2004, the parties to the Whitewing Litigationentered into a settlement agreement, providing, among otherthings, Enron's payment of an aggregate $75 million as cashsettlement consideration and an allowed $3.6 billion generalunsecured claim against Enron. The Court-approved Settlementalso provided that the Fraud Claims asserted by Claimants intheir Original Proofs of Claims were expressly preserved.

Pursuant to the Settlement Agreement and Enron's expressagreement, the Claimants amended the Claims to eliminate allclaims other than the Osprey Fraud Claims, which were reallegedin their entirety. On April 13, 2004, Principal, PIMCO and Aegonfiled Amended Claim Nos. 24743, 24741 and 24742.

The Debtors objected to the Amended Claims.

Pursuant to a settlement agreement with various third parties,the Claimants have agreed to withdraw the Amended Claims.

Pursuant to Rule 3006 of the Federal Rules of BankruptcyProcedure, the Claimants sought the Court's authority to withdrawthe Amended Claims.

A. Brent Truitt, Esq., at Hennigan, Bennett & Dorman LLP, in NewYork, argues that the Claimants should be allowed to withdraw theAmended Claims without prejudice, based on these factors:

(i) The Claimants exercised diligence in bringing the Motion to Withdraw. The Claimants reached the Third Party Settlement, which obviated the need for continued prosecution of the Amended Claims, only within the last few months. Furthermore, since the time the Settlement was reached, Enron has not had to take any further court action with respect the Amended Claims.

(ii) There has been no "undue vexatiousness" on the Claimants' part. To the contrary, the Claimants filed the Amended Claims to preserve their rights and claims as against Enron. The only action Enron has been required to take in court with respect to those claims was the filing of an objection back in March, before the Third Party Settlement was reached. Now that they have reached that settlement, the Claimants are promptly seeking to withdraw the Amended Claims with prejudice, without the need for further litigation and without any payment or distribution by Enron.

(iii) The resolution of the Amended Claims has not progressed to the extent that would necessitate a great deal of effort and expense on Enron's part. To the contrary, all that Enron has had to do up to this point is to prepare and file the Objection.

(iv) There will be no duplicative expense of relitigation, as there will be no relitigation -- the Claimants are seeking to withdraw their claims with prejudice.

(v) The Claimants' explanation for the need to withdraw the Amended Claims warrants the Court's authorizing them to do so. Their settlement with third parties requires them to do so and they no longer intend to continue to prosecute the claims.

* * *

The Court gave the Claimants authority to withdraw the amendedclaim.

Headquartered in Houston, Texas, Enron Corporation -- http://www.enron.com/-- is in the midst of restructuring various businesses for distribution as ongoing companies to its creditorsand liquidating its remaining operations. Before the companyagreed to be acquired, controversy over accounting procedures hadcaused Enron's stock price and credit rating to drop sharply.

ENVIRONMENTAL TRUST: Confirmation Hearing Scheduled for Dec. 7--------------------------------------------------------------The U.S. Bankruptcy Court for the Southern District of Californiawill convene a hearing on Dec. 7, 2005, at 2:00 p.m. to discussthe merits of The Environmental Trust, Inc.'s Liquidating Plan ofReorganization.

The Court approved the Debtor's Amended Disclosure Statement onSept. 22, and the plan was sent to creditors for a vote.

As previously reported, the Debtor's Plan provides for itsliquidation by selling some assets for distribution to creditors.Most of the Debtor's assets are not saleable due to theirenvironmentally sensitive habitat or condition. These assets,comprised of 90 parcels of protected habitat, will be offered toclaimants (subject to environmental protections) together with apro rata share of an Endowment Fund. If the claimants reject thenon-saleable assets, they will be turned over to the State ofCalifornia.

The entities which will get first priority to acquire the habitatsare direct permitees or developers.

Funds A & B will be established for distribution to creditors.Fund A will hold 75% of cash proceeds while Fund B will hold theremaining 25% of cash proceeds.

Headquartered in San Diego, Calif., The Environmental Trust, Inc.,filed for chapter 11 protection on Mar. 23, 2005 (Bankr. S.D.Calif. Case No. 05-02321). Michael D. Breslauer, Esq., at SolomonWard Seidenwurm & Smith, LLP, represents the Debtor. When theDebtor filed for protection from its creditors, it listed $1million to $10 million in assets and $10 million to $50 million indebts.

Judge Schermer determined that the Plan met the 13 standards forconfirmation required under Section 1129(a) of the BankruptcyCode.

Business Consolidation

The Reorganized Debtors' profitability is dependent on the successof its consolidation plan. The plan is designed to increase theirresponsiveness to customers, add value through reduced costs andreliability, improve efficiency and financial performance. Thesesteps include:

a) consolidation and reduction of administrative overhead along with elimination of redundancies and inefficiencies throughout the entire company;

b) alignment of sales, marketing and customer service functions with the manufacturing and product development functions in order to improve responsiveness and quality;

c) continued growth of the Debtors' international design and sourcing capabilities;

d) creation of partnership network with high quality suppliers who provide superior value;

e) improvement of customer service by exceeding expectations in product quality and designs, and improving the timeliness of deliveries in order to provide maximum value and satisfaction;

g) downsizing of facilities in the United States and relocation of support services, accounting, field service, and customer service functions to Tennessee; production will be concentrated in the Morristown and Newport facilities;

h) outsourcing product and reducing material costs;

i) process improvement in plants and improvement in support functions;

j) implementing a pricing strategy which will maximize profitability in the future; a tiered-pricing based on standards will be introduced to customers;

k) quality improvements; and

l) disposition of subsidiaries and other assets:

-- transition of employees to the Morristown facility; -- downsizing the St. Louis headquarters; -- sale of the Phillocraft product lines; -- closure of the Epic offices in Florida; and -- sale of Sellers & Josephson, Inc., the Mimon facility in the Czech Republic and excess inventory.

General unsecured creditors and noteholders won't get anythingunder the Plan. However, these creditors will be given the rightto purchase shares of the New Common Stock of Reorganized Falcon.

A portion of the New Common Stock of Reorganized Falcon will beissued to the Term B Secured Lenders in exchange for their$45.7 million claims, subject to dilution by the Rights Offeringand the Management Incentive Plan. The Rights Offering isexpected to infuse $30 million in cash into Reorganized Falcon.

Proceeds from the Rights Offering and the Term B secured loan willbe used to pay down $25 million of what's owed to the Term Asecured lenders. The $45 million balance will be reinstated inaccordance with the Amended Term A Loan Agreement.

The $37.8 million DIP loan will be paid by $20 million from theproceeds of the Rights Offering and the Term B secured loan, andthen will be refinanced and replaced by an exit facility of atleast $45 million.

Shareholders won't get anything under the Plan.

The Debtors will emerge as a private company and the New CommonStock to be issued will be restricted securities that are notpublicly traded and will have limited liquidity.

Asset Sale

Separately, the Company disclosed that it has completed the saleof the assets of its Sellers & Josephson wallcoverings subsidiary.The sale was approved by the Bankruptcy Court at a hearing onSept. 28, 2005.

Headquartered in Saint Louis, Missouri, Falcon Products, Inc.-- http://www.falconproducts.com/-- designs, manufactures, and markets an extensive line of furniture for the food service,hospitality and lodging, office, healthcare and education segmentsof the commercial furniture market. The Debtor and its eightdebtor-affiliates filed for chapter 11 protection on January 31,2005 (Bankr. E.D. Mo. Lead Case No. 05-41108). Brian WadeHockett, Esq., and Mark V. Bossi, Esq., at Thompson Coburn LLPrepresent the Debtors in their restructuring efforts. When theDebtors filed for protection from their creditors, they listed$264,042,000 in assets and $252,027,000 in debts.

FEDERAL-MOGUL: Inks Agreements to Amend Plan of Reorganization--------------------------------------------------------------As reported in the Troubled Company Reporter on Sept. 28, 2005,Federal-Mogul Corporation (OTCBB:FDMLQ) and various of itsconstituencies in the Chapter 11 proceedings have reachedagreement with the United Kingdom Administrators of Federal-Mogul's UK affiliates. The result of the agreement will allowFederal-Mogul to retain the businesses and other assets of its UKaffiliates in exchange for monetary amounts and reserves that willbe used by the Administrators to provide a distribution to UKcreditors.

In conjunction with the U.K. Settlement Agreement, at the omnibushearing dated September 29, 2005, the Debtors delivered to theBankruptcy Court two agreements that reflect the terms ofamendments that will be made to the Third Amended Joint Plan ofReorganization:

1. A Term Sheet entered into by Federal-Mogul, the other Plan Proponents and High River Limited Partnership; and

2. A Letter Agreement between Carl Icahn and the Official Committee of Unsecured Creditors relating to the Term Sheet and certain corporate governance in the reorganized Federal-Mogul.

The Term Sheet

The Term Sheet provides that the Asbestos Trust to be createdunder the Plan and Section 524(g) of the Bankruptcy Code will:

a. obligate itself to make a payment to the reorganized Federal-Mogul, or pay a portion of the stock in the reorganized Federal-Mogul to be issued to the Trust, for the agreed amounts that will be used by the Administrators as distributions on account of the U.K. asbestos personal injury claims pursuant to the U.K. Settlement Agreement; and

b. grant an option for the purchase of the remaining stock of the reorganized Federal-Mogul that will be issued to the Asbestos Trust under the Plan.

The Asbestos Trust will issue to Federal-Mogul a $125 millionnote that matures 10 business days after the Effective Date ofthe Debtors' Plan.

On the Maturity Date, in exchange for the Note, the Trust willpay 13.88% of the Trust's distribution of stock obtained fromFederal-Mogul pursuant to the Plan -- the distribution being50.1% of the reorganized Federal-Mogul stock -- in completesatisfaction of the Note; provided, however, that:

-- 32% of the 13.88% of the stock will be held in escrow by Federal-Mogul; and

-- after resolution of claims filed by (i) Chester Street Insurance Holdings Limited, (ii) Chester Street Employers Association Limited, (iii) QBE Insurance Company (UK) Limited, (iv) all or any shipyard companies insured by the entities, and (v) any employee or employees of those insured shipyard companies and (vi) the Financial Services Compensation Scheme from a EUR22,000,000 reserve established under the U.K. Settlement Agreement, if any amount is returned to Federal-Mogul pursuant to the U.K. Settlement Agreement, Federal-Mogul will return an equivalent amount of the escrowed stock to the Trust.

Mr. Icahn will be granted a call on the remaining stock held bythe Asbestos Trust. The Call will expire on the 60th day afterthe Effective Date, provided however that if the schemes ofarrangement or company voluntary arrangements are not yetapproved then the Call Period will be extended to the earlier ofJuly 31, 2006, or the Effective Date of the Schemes or CVAs.

In the event Mr. Icahn exercises the Call option, upon resolutionof the Chester Street claims, the Federal-Mogul stock held inescrow will be offered to Mr. Icahn for cash consideration on thesame terms as the Call stock. If Mr. Icahn, on the other hand,declines, then the Asbestos Trust can sell the stock in themarket, subject to regulatory and contractual compliance.

At the expiration of the Call Period and in the event that Mr.Icahn does not exercise the Call, Mr. Icahn will provide theAsbestos Trust with a $100 million term facility secured by theremaining shares of common stock of Federal-Mogul held by theAsbestos Trust. The common stock will have a quarterly interestpayable at LIBOR plus 100 bps (not to exceed 5.5%) that maturesfour years from the Effective Date.

If Mr. Icahn exercises the Call then he will pay to the AsbestosTrust $775 million consisting of:

* $375 million in cash; and

* $400 million note payable in equal quarterly installments beginning in year three maturing 7 years from the date of issuance with interest payable quarterly at LIBOR plus 100 bps (not to exceed 5.5%).

The Icahn Note will be issued by High River or American RealEstate Partners LP, and the Asbestos Trust will be entitled toreceive from time to time, at its request, information to assureitself of High River's or AREP's ability to satisfy the IcahnNote.

In the event that Mr. Icahn exercises the Call and the claims ofCooper Industries, Inc., against Federal-Mogul and its affiliateshave not been settled, released and resolved pursuant to the Planthen the indemnification obligations of the Asbestos Trustrelating to the Cooper Claims will be secured by the Icahn Note.All proceeds, including interest received from the Icahn Notewill be paid to Federal-Mogul until any amounts paid by Federal-Mogul or any of its affiliates on account of the Cooper Claimsare repaid in full.

Until the Cooper Payments are repaid in full, after 45 days, theywill accrue interest at 15%. If at any time all incurred CooperPayments have been repaid in full, but the Cooper Claims have notbeen fully satisfied, a portion of the proceeds, includinginterest, received from the Icahn Note will be paid to theAsbestos Trust subject to an appropriate reserve for expectedfuture Cooper Payments.

The obligations under the Term Sheet will take effect on theEffective Date of Federal-Mogul's Third Amended Plan.

The Creditors Committee informed Mr. Icahn of their willingnessto execute the Term Sheet on the condition that Mr. Icahn and hisaffiliates support the amendments to the Third Amended Joint Planof Reorganization and related Plan Documents. Mr. Icahn agreed.

The terms of the Letter Agreement provides that:

a. The Creditors Committee will designate Neil Subin as one of the initial members of the reorganized Federal Mogul's board of directors. Mr. Icahn's exercise of the Call option under the Term Sheet will be deemed his and his affiliates' agreement to vote all of their common equity interests in Reorganized Federal Mogul in favor of Mr. Subin at all shareholders' meetings so that Mr. Subin remains a director during the period from and after the Effective Date until at least the second anniversary of the Effective Date. If at any time during the Term Reorganized Federal Mogul's directors are to be elected by written consent in lieu of a meeting of shareholders, Mr. Icahn and his affiliates will deliver their consents in favor of Mr. Subin;

b. Federal-Mogul will be a mandatory reporting company under Section 12 of the Securities Exchange Act of 1934, as amended. If Mr. Icahn exercises the Call option, he and his affiliates will not support any action that will cause Reorganized Federal-Mogul not to continue, during the Term, to be a mandatory reporting company under the Securities Exchange Act, with respect to the Class A stock to be issued pursuant to the Plan;

c. Should Mr. Icahn exercises the Call and, thereafter, it is proposed that Reorganized Federal-Mogul would engage, during the Term, in any transaction other than in the ordinary course or of a de minimis nature to Federal-Mogul with Mr. Icahn or one of his affiliates, Mr. Icahn agrees that as a prerequisite to the consummation of any Icahn Transaction, Federal-Mogul will obtain an opinion from an investment banking firm of national repute to the effect that the transaction is fair, from a financial point of view, to Federal-Mogul and its common equity holders.

If requested by Mr. Subin, in his capacity as a director, Federal-Mogul will select an investment banking firm from among a list of five firms furnished to Federal-Mogul by Mr. Subin. If none of those firms is acceptable to Federal-Mogul then, in that event, Federal-Mogul and Mr. Subin will each select an investment banking firm and that firm will select a third investment banking firm for the purpose of delivering the Opinion; and

d. During the Term, if Mr. Icahn and his affiliates will sell or otherwise dispose of more than an aggregate of 40% of the aggregate common equity interests of his and his affiliates in Reorganized Federal-Mogul immediately after exercising the Call, other than through public open market sales, then that kind of sale or disposition will not be consummated until Mr. Icahn have caused the purchaser to afford each of Reorganized Federal Mogul's minority common equity holders the right to sell or dispose of their common equity interests to that purchaser on the same terms and conditions, including price and proportion of ownership, as would have been negotiated by Mr. Icahn and his affiliates with that purchaser.

The agreements represent one of the most significant steps towardemergence from Chapter 11 in the U.S. and Administration in theU.K., Federal-Mogul Chairman President and Chief ExecutiveOfficer Jose Maria Alapont said in a press release issued onSeptember 30. "We are pleased with the support and collaborationin the recent months from Mr. Icahn, our Plan Proponents andstakeholders. We will welcome Mr. Icahn's potential increasedstake in the emerging and reorganized Company," he said.

Mr. Icahn said in a statement that he was "extremely pleased bythe settlement agreement among the parties and was gratified thathe was able to lend assistance to the settlement process." Hefurther stated that he looked forward to the company's earlyemergence from Chapter 11, "especially at a time when it appearedthat other companies in the auto parts industry were moving inthe opposite direction."

FEDERAL-MOGUL: In Compliance with $500 Million DIP Credit Facility------------------------------------------------------------------Federal-Mogul Corporation and its debtor-affiliates disclose in aregulatory filing with the Securities and Exchange Commission thatthey are in compliance with all debt covenants under their$500,000,000 DIP credit facility.

The Debtors report that as of June 30, 2005, they have drawn$386,900,000, including $24,100,000 in letters of credit, fromthe facility.

The DIP credit facility expires in December 2005. The Debtorsintend to renegotiate the DIP credit facility upon expiration.

The Debtors expect to be in compliance of the loan terms throughthe expiration of the DIP credit facility.

The DIP credit facility charges interest at either the alternatebase rate plus 1-1/4 percentage points or the London Inter-BankOffered Rate plus 2-1/4 percentage points. The ABR is thegreater of either the bank's base rate or the federal funds rateplus 1/2 percentage point.

The commitment available under the DIP credit facility ismandatorily reduced by a portion of proceeds received from futureasset or business divestitures.

FIBERMARK: Fourth Amended Disclosure Hearing Set for Oct. 27------------------------------------------------------------Fibermark Inc.'s third proposed Disclosure Statement explainingits third proposed Amended Plan was approved by the U.S.Bankruptcy Court for the District of Vermont on Sept. 19, 2005.The revised Disclosure Statement and Plan reflected the findingsof Harvey R. Miller, the Court-appointed examiner in the Debtor'scase.

After the unsealing of the Examiner's report, a settlement ofissues identified in the report was reached among Fibermark andits top three bondholders:

(1) To settle potential causes of action by unsecured creditors against AIG and Post and litigation rights held by FiberMark against AIG and Post, bondholders and all other unsecured creditors-excluding the top three bondholders- will receive an all-cash payment estimated to provide a 70% recovery of claim amounts, which was the estimated recovery under FiberMark's initial plan of reorganization and compares favorably with the 54% estimated recovery levels under the plan filed in August. Alternatively, unsecured creditors interested in receiving an equity position in the reorganized company may elect a distribution that includes new common stock along with a partial cash payment, which would provide an estimated 62% recovery of claim amounts. Under both options, the recovery estimates assume that the current value of the allowed claims remains unchanged. AIG and Post will contribute to the funding of the cash payments 8% of unsecured claims, not to exceed $4.2 million. For unsecured creditors receiving the all-cash payment, a portion of the cash will be provided by Silver Point, which will effectively purchase the stock otherwise allocable to those creditors.

(2) Silver Point will purchase the claims of AIG and Post for a negotiated amount. As a result of the purchase, AIG and Post will have no ownership interest in the reorganized company.

(3) AIG, Post and Silver Point have agreed to vote in favor of the company's revised Plan.

(4) The potential causes of action held by unsecured creditors against AIG and Post and litigation rights held by FiberMark against AIG and Post will be released and extinguished under the revised Plan. As a result, the Plan will contain no mechanism for litigating any such causes of action. However, the Plan does not abridge the rights of persons who hold individual causes of action, as defined in the Plan.

(5) AIG, Post and Silver Point will split the cost of the examiner's investigation three ways, subject to a cap totaling $1.75 million.

The settlement relates to the treatment of unsecured claims underthe company's Plan of Reorganization. Shares held by currentstockholders will be cancelled, as detailed in the initial plan.

The Court required the Debtor to incorporate the terms of thesettlement in a revised plan and disclosure statement. OnSept. 23, Fibermark filed its fourth proposed Disclosure Statementand Plan.

The Court will convene a hearing on Oct. 27, 2005, at 10:30 a.m.to consider the adequacy of information in Fibermark's DisclosureStatement as required by 11 U.S.C. Section 1125. Objections tothe Disclosure Statement, if any, must be filed by 5 p.m. ofOct. 17.

FLYI INC: Names David Asai as New Chief Financial Officer---------------------------------------------------------Low-fare airline Independence Air (Nasdaq: FLYI) appointed DavidAsai to the position of Chief Financial Officer, effectiveimmediately.

Mr. Asai has been with Independence Air (and Atlantic CoastAirlines) for more than seven years, serving as its VicePresident, Controller and Assistant Secretary since January 1998.He has been actively involved in leading the finance activities atthe company and led the company's Sarbanes-Oxley internal controlcompliance effort last year. Before joining the company, Mr. Asaiserved as Vice President, Controller and Chief Accounting Officerof Reno Air. Prior to that, he was Vice President Finance andChief Financial Officer of Spirit Airlines. Mr. Asai is aCertified Public Accountant.

"I have worked closely with David for many years and am confidenthe is the right person to take over responsibility as the CFO,"Independence Air Chairman and CEO Kerry Skeen said. "His strongaccounting and finance background make him the ideal candidate forthe job."

Richard Surratt, the company's current Chief Financial Officer,has resigned in order to pursue other opportunities. Mr. Surratthas agreed to remain with the company until Oct. 28, 2005, inorder to ensure a smooth transition.

Mr. Skeen continued, "I would like to thank Richard for hiscontributions to the company over the past six years. He has beena valuable part of our team and we wish him the best in hispursuit of new challenges and opportunities."

Independence Air offers low fares every day with comfortableleather seats and Tender Loving Service(SM).

Financial Woes

In its Form 8-K filed with the SEC on Aug. 11, 2005, the carrierreported a net loss of $98.5 million for second quarter 2005,compared to second quarter 2004 net loss of $27.1 million.

Revenue fell 24% to $117.5 million, and the Company's unrestrictedcash was down to $66 million, from $107 million at the start ofthe quarter and $169 million at the end of 2004.

The company disclosed in its second-quarter 10-Q report with theSEC that it has engaged advisers and is making contingency plansfor a potential Chapter 11 bankruptcy filing.

Headquartered in Dulles, Va., FLYi Inc. -- http://www.flyi.com-- is the parent of Independence Air Inc., a small airline based atWashington Dulles International Airport. Independence Air offerslow fares every day to a total of 45 destinations across Americawith comfortable leather seats and Tender Loving Service(SM).

FLYI INC: Cutting 600 Jobs & Halting Flights to East & West Coasts------------------------------------------------------------------ FlYi Inc., the parent company of Independence Air Inc., hasdisclosed that it will cut its labor force by 18%, or about 600 ofits 3,400 employees by the end of October and cut flight servicesas part of its efforts to cut costs and prevent a bankruptcyfiling, according to published reports.

The Company said that it is gradually discontinuing its service toits western destinations, including San Diego, Los Angeles, SanFrancisco, Seattle and Las Vegas. All flight services to the WestCoast would be completely discontinued by Dec. 1, 2005.

The East Coast destinations the airline would cut include itsservices to Cleveland, Louisville and Indianapolis, but it willretain its flights to Pittsburgh, New York, Chicago and Charlotte.

As reported in the Troubled Company Reporter on Aug. 12, 2005,Standard & Poor's Ratings Services revised the implications of itsCreditWatch review on FLYi Inc. (CC/Watch Neg/--) to negative fromdeveloping.

Headquartered in Dulles, Va., FLYi Inc. -- http://www.flyi.com-- is the parent of Independence Air Inc., a small airline based atWashington Dulles International Airport. Independence Air offerslow fares every day to a total of 45 destinations across Americawith comfortable leather seats and Tender Loving Service(SM).

GARDEN STATE: Has Until Dec. 6 to File Notices of Removal--------------------------------------------------------- The U.S. Bankruptcy Court for the District of New Jersey extendeduntil Dec. 6, 2005, the time within which Garden State MRICorporation an extension, can file notices of removal of pre-petition civil actions pursuant to Bankruptcy Rule 9006(b)(1).

The Debtor explained that prior to the Petition Date, it wasinvolved in litigation against Dr. Golestaneh and his relatedentities in the Superior Court of New Jersey, Chancery Divisionfor Cumberland County, Docket No. C-13-05.

The Debtor gives the Court four reasons in support of theextension:

1) the extension is necessary in order to protect its estate's right to remove the State Court Litigation and any additional actions discovered through an investigation and review of asserted claims against its estate;

2) it has been in constant negotiations with secured creditors and potential financing sources, which if successful, would potentially lead to a resolution of the State Court Litigation;

3) the extension will assure that it does not forfeit valuable rights under 28 U.S.C. Section 1452; and

4) the extension will not prejudice the rights of Dr. Golestaneh and his related entities or other adversaries and it will not prejudice any non-Debtor party to a proceeding that Debtor seeks to remove from pursuing remand under 28 U.S.C. section 1452(b).

Headquartered in Vineland, New Jersey, Garden State MRICorporation, dba Eastlantic Diagnostic Institute --http://www.eastlanticdiagnostic.com/-- operates an out-patient imaging and radiology facility. The Company filed for chapter 11protection on June 9, 2005 (Bankr. D. N.J. Case No. 05-29214).Arthur Abramowitz, Esq. and Jerrold N. Poslusny, Jr., Esq., atCozen O'Connor, represent the Debtor in its restructuring efforts.When the Debtor filed for protection from its creditors, it listedestimated assets of less than $50,000 and estimated debts between$10 million to $50 million.

Sales from continuing operations for the third quarter 2005totaled $134 million, 16% above the $116 million in the thirdquarter 2004. Sales for the first nine months of 2005 were $421million compared to $350 million for the first nine months of2004, an increase of 20%. Sales in 2005 reflect growth in theCompany's Aerospace and Defense business.

The Company's net loss for the third quarter 2005 was $29 millioncompared to a net loss of $47 million for the third quarter 2004.The net loss for the first nine months of 2005 was $54 millioncompared to a net loss of $378 million for the first nine monthsof 2004. The loss in 2004 included a one-time charge of $261million associated with the disposition of the GDX Automotivesegment and a $33 million tax provision to reflect the uncertaintyof realizing deferred tax benefits, given historical losses. Theloss in the third quarter 2005 includes a one-time charge of $28million associated with the anticipated disposition of the FineChemicals business.

The third quarter and nine-month periods in 2005 and 2004 reflectthe Company's decision to classify its GDX Automotive and FineChemicals segments as discontinued operations. The GDX Automotivesale was completed on August 31, 2004.

Asset Sale

In July 2005, the Company disclosed its plan to sell the FineChemicals business to American Pacific Corporation for$119 million, consisting of:

* $100 million of cash, * seller note of $19 million, and * the assumption by the buyer of certain liabilities.

American Pacific Corporation and the Company recently agreed toamend the purchase agreement to modify the sale price and paymentterms related to the Fine Chemicals sale.

The revised purchase price will consist of:

* $89 million of cash payable at closing,

* seller note of $25 million delivered at closing,

* a contingent payment of up to $5 million if the Fine Chemicals business achieves specified earning targets in the Twelve month period ending September 30, 2006, and

* the assumption by the buyer of certain liabilities.

The Company has recorded a loss of $28 million in the thirdquarter based on the difference between current estimated cashproceeds to be received on disposition less the carrying value ofnet assets being sold and related transaction selling costs. TheCompany continues to expect the transaction to close in October2005.

"The sale of Fine Chemicals allows us to focus our attention andour capital on our two core segments: Aerospace and Defense andReal Estate. Both segments continue to make good progress towardthe Company's strategic goals," said Terry Hall, chairman,president and chief executive officer.

"The increase in Aerojet's sales both in the third quarter and inthe year to date period supports our strategic objective tostrengthen our position as a critical supplier of propulsiontechnologies to our customers. Aerojet's nine month sales were up$62 million over 2004 and contract backlog exceeded $935 millionat August 31, 2005. With the recent completion of the RocketdynePropulsion Unit purchase by United Technologies, U.S. industryconsolidation within the solid and liquid propulsion markets inwhich we compete is essentially complete with Aerojet firmlyestablished as one of two major suppliers in each of thosemarkets.

"In our Real Estate segment, the rezoning applications for the RioDel Oro, Glenborough and Westborough projects are moving throughthe administrative process of the City of Rancho Cordova andSacramento County. The schedule for the final approvals of allthree projects remains on track with our previous guidance,"concluded Mr. Hall.

Decrease in Debt

Total debt decreased to $424 million at Aug. 31, 2005, from$577 million at November 30, 2004. Total debt less cash increasedfrom $308 million at November 30, 2004 to $421 million as ofAug. 31, 2005. The $113 million increase resulted from:

* costs associated with the recapitalization transactions completed in the first quarter of 2005,

* working capital requirements due to the timing of payables and receivables and associated with the growth in Aerojet's business volume,

* Atlas V inventory increases relating to deliveries scheduled for later in 2005,

* capital expenditure requirements,

* non-recurring investment in the Fine Chemicals business, and

* cash interest expense.

The Company believes that with its existing cash combined with theanticipated proceeds from sale of the Fine Chemicals business, and$70 million of borrowings available under its credit facilities,it will have sufficient funds to meet the operating plan for thenext twelve months.

GenCorp Inc. -- http://www.GenCorp.com/-- is a leading technology-based manufacturer of aerospace and defense productsand systems with a real estate business segment that includesactivities related to the development, sale and leasing of theCompany's real estate assets.

The petitioners hold a $1,980,000 unsecured claim from alitigation judgment against Global Environmental.

According to these unsecured creditors, the Debtor fails to meetthe requirements for proper venue of its bankruptcy filing as itdoesn't have its principal place of business or principal assetsin the United States.

Fitch does not rate classes P and S-AM. Classes S-MAC-1, S-MAC-2,S-MAC-3, and S-MAC-4 represent the interest in the trust fundcorresponding to the junior portion of the MacArthur Center loan.

The rating affirmations reflect overall stable performance of thetransaction. Although 19 loans (14.52%) have fully defeased,Fitch loans of concern have increased to 9.5% of the transaction.As of the September 2005 distribution date, the pool's collateralbalance has decreased 5.81% to $1.20 billion from $1.27 billion atissuance.

Currently, there are five specially serviced loans (0.75%) in thistransaction. The largest specially serviced loan (0.27%) consistsof 11 apartment buildings located around the Quad Cities inIllinois and Iowa and is 90+ days delinquent. The specialservicer is in the process of initiating a foreclosure action.Based on current appraisal values, a significant loss is expectedupon liquidation.

The second largest specially serviced loan (0.18%) is amultifamily property located in Beaumont, TX. This loan is 30days delinquent and the special servicer anticipates foreclosingon this property in early October. Current appraisal valuesindicate a small loss upon liquidation.

Fitch reviewed the transaction's three credit assessed loans andtheir underlying collateral. The Fitch stressed debt servicecoverage ratio is calculated using servicer provided net operatingincome less required reserves divided by debt service paymentsbased on the current balance using a Fitch stressed refinanceconstant. Due to their stable performance, the loans retain theirinvestment grade credit assessments.

The Arizona Mills loan (11.26%) is secured by a 1.23 millionsquare feet regional mall and is located in Tempe, AZ. The year-end 2004 DSCR for the loan was 1.65 times (x) versus 1.72x as ofYE 2003 and 1.58x at issuance. Occupancy as of YE 2004 is 96.5%compared to 96.0% as of YE 2003 and 98.0% at issuance.

The MacArthur Center loan (7.7%) is secured by 528,846 sf in a942,662 sf regional mall in Norfolk, VA. The property is thedominant upscale mall serving the Hampton Roads MSA. The YE 2004DSCR for the A note of this loan is 1.81x compared to 1.92x atissuance. Occupancy as of January 2005 is 100% compared to 92% atissuance.

The AmeriSuites loan (2.4%) is secured by eight limited service,cross-collateralized, cross-defaulted hotels located in eightstates. The DSCR as of YE 2004 for the A note of this loan is1.88x compared to 1.67x as of YE 2003 and 1.75x at issuance. Asof YE 2004, the occupancy is 70%, compared to 78% as of YE 2003,and 69.3% at issuance. While occupancy has decreased sinceissuance, increased room revenues and higher income from food andbeverage and telephone have all attributed to an increase in theproperty's net cash flow in comparison to 2003.

The change in the outlook to negative is based on Moody'sexpectation that pressure on Graphic's operating earnings and cashflow, which continue to be impacted by steady gross margindeterioration due to higher prices for chemical based inputs,fiber, and energy, will continue over the intermediate term.These inflationary pressures coupled with a delay in an ability toraise prices to certain contracted customers significantly impactmargins.

In December of 2004, Moody's stated that the company's inabilityto improve credit metrics or deterioration in liquidity, due inpart to poor pricing, increased competition, or increasing inputcosts could negatively impact the outlook and/or ratings.Specifically, if the company failed to reduce leverage (asmeasured by debt to EBITDA) below 5.0x over the next 12 to 18months, then the ratings could go down.

For the twelve months ended June 30, 2005, Graphic's leverageremained high with EBITDA coverage of total debt of approximately6.6x, although interest coverage was reasonable on an EBITDA basisat 2.0x. Over the next 12 months, if it is not evident that thecompany is making progress towards achieving a leverage ratio of5.0x on an adjusted basis, and retained cash flow to total debtaround 8% on an adjusted basis, the ratings are likely to go down.

The downgrade of the Speculative Grade Liquidity Rating to SGL-3from SGL-2 follows Graphic's announcement that the company willseek an amendment to its $1.6 billion credit agreement in order toavoid any potential violations due to inflationary pressures andan inability to pass through all cost increases, and reflectsMoody's expectation of lower cash flow over the next 12 months.The bank covenants step down in the fourth quarter of 2005 andwill require some modification since operating performance ormargins will deteriorate. Although the company is likely toreceive covenant relief from its lenders, anticipated lower freecash flow will mean that the SGL rating is not likely to beupgraded back to the SGL-2 level over the near term.

Over the next twelve months, Moody's expects the company togenerate modest free cash flow, which includes:

Due to the expected deterioration of margins, the company is morelikely to rely on its bank revolver for working capital needs. Asof June 30, 2005, the company had approximately $35.8 millionoutstanding on its $325 million revolving credit facility withundrawn availability of about $275 million after $14 million ofLC's and covenant limits.

Moody's views alternate sources of liquidity available to thecompany as limited. All assets are encumbered with the bankfacility having a priority claim to all tangible and intangibleassets of the company.

Graphic's B1 corporate family rating reflects the company'sleading position in folding consumer cartons and coated unbleachedkraft paperboard, in addition to extensive customer relationships,continued focus on cost improvements, and adequate liquidity.However, the ratings also incorporate:

(a) advise the Debtor of its rights, powers, and duties as debtor and debtor-in-possession;

(b) take all necessary actions to protect and preserve the estate of the Debtor, including the prosecution of actions on the Debtor's behalf, the defense of actions commenced against the Debtor, the negotiation of disputes in which the Debtor is involved and the preparation of objections to claims filed against the estate;

(c) prepare on behalf of the Debtor, as debtor-in-possession, all necessary motions, applications, answers, orders, reports, and papers in connection with the administration of the estate;

(d) draft, negotiate and prosecute on behalf of the Debtor a liquidating plan of reorganization, the related disclosure statement, and any revisions or amendments, relating to the said documents, and all related materials;

(e) perform all other necessary legal services in connection with the Debtor's case and any other bankruptcy related representation that the Debtor requires; and

(f) handle all litigation, discovery and other matters for the Debtor arising in connection with its bankruptcy case.

Mark Edward Andrews, Esq., a partner at Neligan Tarpley Andrews &Foley LLP, discloses that as of the bankruptcy filing, the Firm isholding a $19,410.49 retainer. The hourly rates of professionalsengaged are:

The Debtor owes Summit National Bank approximately $1.4 million.Summit has a lien on a building, which is currently under a salecontract. In addition, Summit has liens on accounts receivableand general intangibles and certain life insurance policies. TheDebtor says that the sale of the building will clear the debt owedto Summit.

Zurich American Insurance Company claims to be a secured creditorand has claims in excess of $2 million. Because Zurich filed aForm UCC-1 with the Secretary of State on July 26, 2005 (less than90 days before the chapter 11 filing) to perfect its securityinterest, the Debtor says the purported lien is subject toavoidance as a preference. The Debtor takes the position thatZurich is not secured at this time, subject to furtherinvestigation.

The Debtor owes Orix approximately $250,000. Orix filed liens ona crane, which is tentatively sold, subject to Court approval.The Debtor says the sale of the crane will satisfy Orix's lien.

The Debtor asserts that its use of cash collateral is minimal andnecessary to fund operations. The Debtor also asserts that Summitand Orix are oversecured. The equipment and building materials inFort Worth provide ample collateral to offset Zurich's purportedunperfected lien.

The Debtor will use the cash collateral to fund its winding downoperations, payroll, and other operating expenses that arenecessary to maintain the value of the estate.

HOUSE2HOME: $6.4 Million of TJX Companies Claim is Senior Debt--------------------------------------------------------------House2Home, Inc., and its debtor-affiliates ask the U.S.Bankruptcy Court for Central District of California, Santa AnaDivision, to approve the stipulation recognizing approximately$6,350,000 of TJX Companies, Inc.'s claim as an allowed seniordebt claim under Class 4 of their confirmed Joint Chapter 11 Planof Liquidation.

The Stipulation is the product of negotiations between TJXCompanies and U.S. Bank National Association, successor to StateStreet Bank and Trust Company of California, N.A. U.S. Banksucceeded State Street Bank as trustee to Notes issued byHomebase, Inc., under an Indenture dated Nov. 10, 1997.

TJX Companies' Claims

The Debtors' plan of liquidation, confirmed in June 2003,classifies approximately $19,102,749 of TJX Companies' Claims asan allowed general unsecured claim.

In Nov. 2003, TJX Companies filed a notice asserting that it holdsapproximately $43,024,715 in claims, plus additional contingentand unliquidated sums, against the Debtors' estate. TJX Companiesargued that its claim is a senior debt and should be treated asClass 4 claim under the plan.

In conjunction with the filing of notice, TJX Companies commenceda civil action (Civil Action No. 03-5237 BLS) against U.S. Bank inthe Commonwealth of Massachusetts, Suffolk Superior Court. U.S.Bank responded to the complaint by denying that TJX Companies'senior debt claim constitutes a senior debt under the indenture.

The Settlement

Following a round of negotiations, TJX Companies has agreed to bepaid $6,350,000 in full and complete satisfaction of its seniordebt claims. TJX Companies will receive the settlement amount inaddition to its previously allowed $19,102,749 general unsecuredclam.

INDUSTRIAL ENTERPRISES: Liquidating 15 Million Power3 Shares------------------------------------------------------------Industrial Enterprises of America, Inc. (OTCBB:ILNP) disclosedthat its management has decided to sell and/or dividend theCompany's full stake in Power3 Medical Products, Inc. (OTC:PWRM).Industrial Enterprises of America currently owns 15 million sharesof Power3 Medical's stock obtained in consideration for the saleof intellectual property to PWRM in May of 2004. The Companyplans to initiate transactions to begin liquidating all of itsholdings in Power3 Medical in full accordance with SEC rules andregulations.

Industrial Enterprises management made this decision afterrequesting that Power3's transfer agent remove the transferrestrictions from the Power3 stock held by the Company. Power3'stransfer agent informed Industrial Enterprises that it could onlyremove the legend after receiving an opinion from Power3'scounsel, Sichenzia Ross Friedman Ference LLP. Sichenzia RossFriedman Ference has since refused to issue the opinion and hasnot provided a reason for the refusal. Litigation between the twocompanies had already ensued over another matter and has not beensettled at this point.

Headquartered in New York, New York, Industrial Enterprises ofAmerica, Inc. -- http://www.TheOtherGas.com/-- is one of the largest worldwide providers of refrigerant gases, specializing inconverting the hydroflurocarbon gases, R134a and R152a, intobranded and private label refrigerant and propellant products.The Company's main product, the "gas duster" is used in a varietyof industries including consumer electronics, medical, and theautomotive aftermarket.

* * *

Going Concern Doubt

Beckstead and Watts, LLP, had expressed substantial doubt aboutIndustrial Enterprises' ability to continue as a going concernafter it audited the Company's financial statements for the fiscalyear ended June 30, 2005. The auditors point to the Company'ssustained net losses and stockholders' deficit.

At March 31, 2005, Industrial Enterprises' total liabilitiesexceed its total assets by $1,681,900.

INTERSTATE BAKERIES: 207 Creditors Sell $1.8 Million of Claims--------------------------------------------------------------From September 1 to September 30, 2005, the Clerk of theBankruptcy Court recorded 207 claim transfers to:

Headquartered in Kansas City, Missouri, Interstate BakeriesCorporation is a wholesale baker and distributor of fresh bakedbread and sweet goods, under various national brand names,including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R),Merita(R) and Drake's(R). The Company employs approximately32,000 in 54 bakeries, more than 1,000 distribution centers and1,200 thrift stores throughout the U.S.

-- $52.1 million class D to 'AA-' from 'A+'; -- $12.0 million class E to 'A' from 'A-'; -- $38.1 million class F to 'BBB-' from 'BB+'; -- $26.0 million class G to 'B+' from 'B'; -- $4.0 million class H to 'B' from 'B-'.

The upgrades reflect the increased credit enhancement levels fromloan payoffs and amortization. As of the September 2005distribution date, the pool's aggregate principal balance has beenreduced by 24% to $609.4 million from $801.4 million at issuance.In addition, the largest loan in the pool (8.3%) has defeased.

One asset (1.3%) is currently specially serviced and real estateowned. The REO is secured by an office property in Jackson,Mississippi. The special servicer is working on stabilizing theproperty before marketing it for sale. Losses are expected.There have been no realized losses in the pool to date.

The Debtors asked the U.S. Bankruptcy Court for the District ofDelaware to approve the modifications to the First Amended1113/1114 Agreement.

The modifications will have minimal economic effect on theDebtors or on Reorganized KAC, Ms. Newmarch assures JudgeFitzgerald. Reorganized KAC will only be required to makeadvances if the VEBA experiences liquidity problems and will beentitled to reimbursement for the full amount of any advances,with interest, Ms. Newmarch explains.

* * *

Judge Fitzgerald approves the Settlement Agreement. The Courtoverrules all objections filed and not withdrawn.

Judge Fitzgerald emphasizes that nothing in her order will affectany insurers' rights, if any, to assert a contribution,subrogation, reimbursement or indemnification claim against theUnderwriters and those insurers' rights to object to anychanneling injunctions in any plan of reorganization in connectionwith confirmation of that plan are preserved.

Headquartered in Foothill Ranch, California, Kaiser AluminumCorporation -- http://www.kaiseraluminum.com/-- is a leading producer of fabricated aluminum products for aerospace and high-strength, general engineering, automotive, and custom industrialapplications. The Company filed for chapter 11 protection onFebruary 12, 2002 (Bankr. Del. Case No. 02-10429), and has soldoff a number of its commodity businesses during course of itscases. Corinne Ball, Esq., at Jones Day, represents the Debtorsin their restructuring efforts. On June 30, 2004, the Debtorslisted $1.619 billion in assets and $3.396 billion in debts.(Kaiser Bankruptcy News, Issue No. 80; Bankruptcy Creditors'Service, Inc., 215/945-7000)

The downgrades to classes L and M are due to the lack ofsubstantial improvement in leasing activity and net cash flowperformance at both the Michigan Industrial Portfolio and theBoulder Portfolio since Fitch's last review. The upgrades are dueto the recent repayment of the Printer's Square loan and scheduledamortization, which have resulted in increased credit enhancementsto the classes. As of the September 2005 distribution date, thepool's outstanding principal balance has been reduced 87.9% to$125.6 million from $1.3 billion at issuance. Sixteen loans havepaid off since issuance.

Year to date June, 30, 2005, the Fitch adjusted normalized netcash flow decreased 36.5% since issuance, reflecting the declinesin occupancy. The Fitch stressed debt service coverage ratio forthe trust mortgage balance as of YTD June 30, 2005 was 0.87 times(x) compared to year-end 2004 at 0.74x and 1.35x at issuance.

Affiliates of Kojaian Management Co., one of the largestindustrial owners in the submarket, own and manage the propertiesand are actively marketing the vacant space. Although Fitchremains concerned with the loan performance, the loan isamortizing on a 30-year schedule and benefits from a low loan persquare foot of less than $17.

The Boulder Portfolio (31.6%) consists of three office propertieslocated in Boulder, Colorado. Occupancy for the portfolio as ofJune 2005 was 68.1%, compared to 66.7% as of Dec. 31, 2004 and95.4% at issuance. As of YE 2004, the Fitch adjusted NCF declined14.4% since issuance, reflecting the decline in occupancy. TheDSCR as of YE 2004 for the trust mortgage balance was 1.20xcompared to 1.40x at issuance.

The servicer is holding a $1.2 million lease rollover reserve asof September 2005. Although Fitch remains concerned with the loanperformance, the loan remains current with a maturity of March2006. The borrower, an affiliate of Investcorp, is activelymarketing the vacant space.

As part of its review, Fitch analyzed the performance of the tworemaining loans and the underlying collateral. DSCRs werecalculated based on a Fitch adjusted NCF and a stressed debtservice constant. For the Michigan Industrial and BoulderPortfolio loans, an all-in DSCR was also calculated in order tofully reflect the entire stress on the loan.

The Company incurred a $908,572 for the year ended Dec. 31, 2004on $135,209,066 of revenues compared to a $1,010,000 net profit in2003. Management attributes the negative result in 2004 primarilyto a 14% enrollment drop during the year.

MDNY Healthcare recorded 40,447 enrollments in 2004 compared to47,029 enrollments in 2003. MDNY is focusing on six areas toachieve profitability, expansion and enrollment growth in 2005:

-- Applying for an Article 42 accident and health company license to allow MDNY to develop new products and benefit plan designs and match increased cost sharing provisions that certain of MDNY's competitors have marketed to their customers.

-- Achieving administrative efficiencies by, among other things, increased use of automation and electronic transmission.

-- Marketing to brokers in Nassau and Suffolk Counties, New York to increase name recognition and promote enrollment growth.

-- Expanding into Queens County, New York, where MDNY has an established provider network.

-- Expanding marketing of MDNY's self-insured products.

-- Pursuing potential partnerships investments in and acquisitions of MDNY

The Company had negative working capital of approximately$17.2 million at Dec. 31, 2004.

Diocese of Rockville Non-Renewal

The Catholic Health Services of Long Island, Inc. and the Dioceseof Rockville Centre has notified MDNY Healthcare that they willnot renew their current subscriber contracts with MDNY uponexpiration effective January 1, 2006 and 2005 respectively.

MDNY Healthcare subject to the New York Women's Health andWellness Act, which, as of January 1, 2003, obligates MDNY toprovide contraceptive drugs and devices to its members. Thefamily planning program is in conflict with the ethical policiesof the Diocese of Rockville Centre, to which CHSLI and CatholicHealthcare Network of Long Island, Inc., are affiliated.

Because of the ethical conflict, MDNY and CHNLI executed the StockPurchase Agreement so as to allow CHNLI to exit as an MDNYshareholder. CHNLI had owned the remaining 33% of the stock inMDNY. CHNLI's departure resulted in the loss of approximately3,800 members.

About Long Island Physician

Long Island Physician Holdings Corporation was formed in 1994 byphysicians residing and practicing in New York State. The Companyconducts no operating activities of its own. Long IslandPhysician Holdings' principal asset is a 67% equity interest inMDNY Healthcare, Inc. -- http://www.mdny.com/-- an independent practice association-model health maintenance organization, thatcurrently operates in Nassau and Suffolk counties, New York. Thefinancial statements of MDNY are consolidated into the auditedfinancial statements of Long Island Physician Holdings.

-- file its Forms 10-Q for the periods ended June 30, 2005 and Sept. 30, 2005;

-- file all required restated and other financial statements for previous periods; and

-- otherwise meet all necessary listing standards of the NASDAQ National Market.

However, there can be no assurance that the Company will be ableto make the required filings by Nov. 30, 2005, or that NASDAQ willgrant any additional extension if necessary. During the extensionperiod, the Company's common stock will continue to be listed onthe NASDAQ National Market under the trading symbol: MERQE.

Mercury Interactive Corporation -- http://www.mercury.com/-- is committed to helping customers optimize the business value ofinformation technology. Founded in 1989, Mercury conductsbusiness worldwide and is one of the largest enterprise softwarecompanies today. Mercury provides software and services for ITGovernance, Application Delivery, and Application Management.Customers worldwide rely on Mercury offerings to govern thepriorities, processes and people of IT and test and manage thequality and performance of business-critical applications.Mercury BTO offerings are complemented by technologies andservices from global business partners.

* * *

Financial Restatements

As reported in the Troubled Company Reporter on Aug. 31, 2005, theCompany concluded that its previously issued financial statementsfor the fiscal years 2002, 2003 and 2004, which are included inthe Company's Annual Report on Form 10-K for the year endedDec. 31, 2004, the Quarterly Reports on Form 10-Q filed withrespect to each of these fiscal years and the financial statementsincluded in the Company's Quarterly Report on Form 10-Q for thefirst quarter of fiscal year 2005, should no longer be relied uponand will be restated. In addition, the restatement will affectfinancial statements for prior fiscal years, and the Company willalso require a revision of the previously reported financialinformation included in its press release of July 28, 2005 and itsCurrent Report on Form 8-K dated Aug. 17, 2005.

Mercury intends to complete the restatements and make the requiredamended Form 10-K and Form 10-Q filings and to file its Form 10-Qfor the second quarter of fiscal year 2005 as soon as practicablefollowing completion of the Special Committee investigation, theCompany's review and restatement of its historical financials andcompletion of the audit process. The Company does not expect thatit will be able to complete this process and make the requiredfilings before November 2005.

The errors resulting in the required restatement relate to theSpecial Committee's conclusion that the actual dates ofdetermination for certain past stock option grants differed fromthe originally selected grant dates for such awards. Because theprices at the originally selected grant dates were lower than theprice on the actual dates of determination, the Company will incuradditional charges to its stock-based compensation expense, whichwere not included in the above-referenced financial statements.The Company has determined that the amounts of these charges arematerial but has not yet determined the final amount of theadditional charges to be incurred.

Likely Material Weakness

Additionally, Mercury is evaluating Management's Report onInternal Control Over Financial Reporting set forth in Item 9a onpage 53 of the Company's 2004 Annual Report. Although Mercury hasnot yet completed its analysis of the impact of management'sevaluation on its internal controls over financial reporting, ithas determined that it is highly likely that Mercury had amaterial weakness in internal control over financial reporting asof Dec. 31, 2004.

Fitch does not rate the $22.0 million class H. Classes A-1 and A-2have been paid in full.

The upgrades reflect improved credit enhancement levels due toloan payoffs and amortization. As of the September 2005distribution date, the pool's aggregate certificate balance hasdecreased 59% to $445.0 million from $1.1 billion at issuance.There are currently 123 loans remaining in the pool of theoriginal 300 at issuance.

Currently, six loans (5.43%) are in special servicing. Thelargest specially serviced asset (1.40%) is a real estate ownedlimited service hotel located in Portland, OR. The property iscurrently under contract for sale. Fitch expects a significantloss upon liquidation of the asset.

The second largest specially serviced asset (1.37%) is an REOlimited service hotel in Seattle, WA. The special servicer hastaken title to the property and is preparing to list the propertyfor sale. Fitch expects a loss upon liquidation of the propertybased on the most recent appraised value.

Fitch continues to monitor the Shilo portfolio of loans withinthis transaction. The loans are current and performing under amodification agreement. Recent operating data reported by themaster servicer shows several properties have a negative cashflow.

Fitch analyzed each loan in the pool and assumed stressed defaultprobabilities and loss severities for loans of concern, includingliquidation scenarios of current specially serviced loans andcertain Fitch Loans of Concern. The required credit enhancementthat resulted from this remodeling of the pool warranted theupgrades to classes D and E.

a. approved a Remediation Consent Order entered into between Mirant NY-Gen, LLC, a Mirant Corporation affiliate, and the New York State Department of Environmental Conservation; and

b. permit Mirant Corporation, its debtor-affiliates and NY-Gen to enter into a related Reimbursement Consent Order that will govern certain penalties and cost reimbursements to the DEC, and an environmental audit.

Jason D. Schauer, Esq., at White & Case LLP, in Miami, Florida,relates that the Consent Orders are products of the discussionsbetween Mirant NY-Gen and the DEC to resolve the environmentalconcerns discovered at the Company's electric power generationstation in Hillburn, New York.

A full-text copy of the Reimbursement Consent Order or theImplementation Consent Decree dated September 15, 2005, betweenMirant NY-Gen and the New York State Department of EnvironmentalConservation that will govern certain penalties and costreimbursements to the DEC, and an environmental audit, isavailable at http://ResearchArchives.com/t/s?23e

Headquartered in Atlanta, Georgia, Mirant Corporation --http://www.mirant.com/-- is a competitive energy company that produces and sells electricity in North America, the Caribbean,and the Philippines. Mirant owns or leases more than 18,000megawatts of electric generating capacity globally. MirantCorporation filed for chapter 11 protection on July 14, 2003(Bankr. N.D. Tex. 03-46590). Thomas E. Lauria, Esq., at White &Case LLP, represents the Debtors in their restructuring efforts.When the Debtors filed for protection from their creditors, theylisted $20,574,000,000 in assets and $11,401,000,000 in debts.(Mirant Bankruptcy News, Issue No. 77; Bankruptcy Creditors'Service, Inc., 215/945-7000)

The Scarlett Swap and the HVB RMP Swap were memorialized by theseagreements dated October 11, 2001:

(1) the ISDA Master Agreement, (2) the Schedule to the Master Agreement, and (3) the Amended and Restated Confirmation.

Mirant Corp. guaranteed MAEM's obligations under the two Swaps.

By the Assignment and Novation Agreement dated January 30, 2003,Scarlett assigned its rights and obligations under the ScarlettSwap, including the Scarlett Contracts and the Scarlett Guaranty,to HVB RMP. Upon the assignment, the Original Guarantees weremerged into, and upon that merger the Original Guarantees werecancelled and replaced by, one master guaranty.

On September 2, 2003, HVB RMP assigned to Bayerische Hypo undVereinsbank all of its rights, title and interest in and to theamounts payable to it with respect to:

(i) the HVB RMP Swap Master Agreement, including the HVB RMP Schedule, the HVB RMP Confirmation and the Scarlett Confirmation; and

(2) the Master Guaranty.

Prepetition Payments under the Swaps

On October 15, 2002, MAEM paid $28,751,179 to Scarlett andreceived a $3,751,179 payment from HVB RMP pursuant to the Swaps.

Under the Scarlett Confirmation, either MAEM or Mirant Corp. wasrequired to indemnify Scarlett for all reasonable third-partyout-of-pocket expenses and additional costs, excluding lostprofit or margin or expenses associated with closing thetransaction.

On January 6, 2003, an additional $893,387 was paid as a resultof additional cost attributable to the downgrade.

Swaps Termination and Motion to Reject

On August 26, 2003, HVB RMP sent a notice of termination to MAEM.In the termination letter, HVB asserted that the HVB RMPContracts and the Scarlett Contracts were "safe harbor" contractsunder Section 560 of the Bankruptcy Code.

To ensure that the Swaps were terminated, on October 2, 2003, theDebtors filed a motion to reject executory contracts withScarlett Resource Merchants LLC and HVB Risk Management Products,Inc.

On July 7, 2004, the Bankruptcy Court authorized the rejection ofthe Contracts.

The Proofs of Claim

On December 15, 2003, HVB filed:

* Claim No. 6045 for $222,913,568 against MAEM, arising from the termination of the Swaps; and

* Claim No. 6046 for $222,913,568 against Mirant Corp. based on the Master Guaranty.

The Debtors objected to the HVB Claims, seeking the reduction ofthe MAEM Claim and the disallowance of the Mirant Corp. Claim asfraudulent transfers.

Tolling Agreement

Subsequently, HVB and the Debtors agreed to toll the statues oflimitations for certain claims, causes of action, proceedings orcounterclaims that might be asserted by and between HVB and theDebtors under various provisions of the Bankruptcy Code and anyapplicable provisions of non-bankruptcy law.

On August 2, 2005, the Bankruptcy Court stayed the Debtors'Objection.

HVB has made informal and formal objections to the Debtors'Disclosure Statement.

After engaging in discussions regarding modifications to the Planand Disclosure Statement and various related matters, HVB and theDebtors agreed to enter into a Stipulation to avoid the cost andexpense of unnecessary motion practice and litigation.

The general terms of the Stipulation are:

a. HVB will have an allowed claim against MAEM for $222,913,568, plus accrued interest at the non-default imputed contract rate commencing as of Mirant's and MAEM's Petition Date;

b. HVB's Claims will be deemed Allowed Unsecured Claims against the Mirant Debtors as Class 3 Unsecured Claims and treated in accordance with the Amended Plan;

c. HVB will not receive any distribution based on the Mirant Corp. Claim under the Amended Plan;

d. The Debtors will withdraw their Objection, without prejudice;

e. HVB will withdraw the Disclosure Statement Objections, without prejudice, and will support the Amended Disclosure Statement and confirmation of the Amended Plan. In addition, HVB will not oppose the substantive consolidation of the Debtors;

f. If the Debtors are substantially consolidated, no holder of a claim similar to the Claims will receive treatment more favorable than the treatment afforded to the Claims. To the extent another holder receives more favorable treatment, HVB will also receive more favorable treatment; and

g. The Tolling Stipulation is terminated and rendered void and all statutes of limitation tolled under the Tolling Stipulation are deemed to have expired on the Effective Date.

Headquartered in Atlanta, Georgia, Mirant Corporation --http://www.mirant.com/-- is a competitive energy company that produces and sells electricity in North America, the Caribbean,and the Philippines. Mirant owns or leases more than 18,000megawatts of electric generating capacity globally. MirantCorporation filed for chapter 11 protection on July 14, 2003(Bankr. N.D. Tex. 03-46590). Thomas E. Lauria, Esq., at White &Case LLP, represents the Debtors in their restructuring efforts.When the Debtors filed for protection from their creditors, theylisted $20,574,000,000 in assets and $11,401,000,000 in debts.(Mirant Bankruptcy News, Issue No. 77; Bankruptcy Creditors'Service, Inc., 215/945-7000)

MIRANT CORP: Creditors Committee Objects to Use of PIRA Forecasts-----------------------------------------------------------------In behalf of the Official Committee of Unsecured Creditorsappointed in Mirant Corporation and its debtor-affiliates' chapter11 cases, Paul N. Silverstein, Esq., at Andrews Kurth LLP, in NewYork, points out that there are a number of aspects of the U.S.Bankruptcy Court for the Northern District of Texas' ruling andits implementation by the VIC that the Mirant Committee disagreeswith and would like the Court to "clarify" or "reconsider." TheMirant Committee believes that:

-- the Court's instruction to use a 12% to 16.6% cost of equity is too low and not supported by the record;

-- the 2006 multiples should not be included in the CompCo analysis given the lack of management projections, or at the very least, should be given a lower weighting;

-- the manner in which the NRG multiple is being calculated is not correct;

-- it is improper to add NOL value to the CompCo analysis because it leads to a double counting and thus grossly overstates the NOL value applicable to Mirant; and

-- Blackstone's cash flow assumptions for the Philippines are incorrect and overstated because they are based on an artificial 2% escalator as opposed to the known actual contract rates for these facilities.

As reported in the Troubled Company Reporter on July 7, 2005,Judge Lynn reached certain conclusions regarding modificationsnecessary to the Debtors' 2005 Business Plan and the report of TheBlackstone Group, to be used in determining the enterprise valueof Mirant, after a 23-day hearing in Fort Worth, Texas.

The Wall Street Journal summarizes the different valuations of theparties, in a previous report:

As of September 6, 2005, the Mirant Committee has not filed amotion for reconsideration on these and a number of other issuesbecause the Court clearly indicated that it would not entertainthose motions, Mr. Silverstein says.

Mr. Silverstein notes that as has been confirmed by all threemembers of the VIC, PIRA has not issued a new long-term coalprice forecast since October 2004, and it would be inappropriateand inconsistent with the Court's directive to somehow "deem" theOctober 2004 forecast to be a "new long-term forecast" simplybecause PIRA recently issued a new short-term forecast. "Infact, by this same reasoning, the VIC should be using the long-term gas price forecasts issued by EVA in August 2004 because EVAalso issued a short-term update earlier this year."

The Mirant Committee says it understands that the Court hasalready rejected the argument in connection with EVA, thus, thereis no reason that the PIRA forecasts should be treated anydifferent.

Headquartered in Atlanta, Georgia, Mirant Corporation --http://www.mirant.com/-- is a competitive energy company that produces and sells electricity in North America, the Caribbean,and the Philippines. Mirant owns or leases more than 18,000megawatts of electric generating capacity globally. MirantCorporation filed for chapter 11 protection on July 14, 2003(Bankr. N.D. Tex. 03-46590). Thomas E. Lauria, Esq., at White &Case LLP, represents the Debtors in their restructuring efforts.When the Debtors filed for protection from their creditors, theylisted $20,574,000,000 in assets and $11,401,000,000 in debts.(Mirant Bankruptcy News, Issue No. 76; Bankruptcy Creditors'Service, Inc., 215/945-7000)

NATIONAL ENERGY: ET Power Wants Court Nod on CalPX Settlement Pact------------------------------------------------------------------California Power Exchange Corporation is a public utility thatprovided various auction markets for the trading of electricityin California under rate schedules and tariffs approved by theFederal Energy Regulatory Commission. In 2000, due to thethen-ongoing California energy crisis, Pacific Gas & ElectricCompany could not meet its obligations to CalPX. By the end ofJanuary 2001, CalPX had suspended trading in its markets and onMarch 9, 2001, CalPX filed for protection under Chapter 11 of theBankruptcy Code.

In response to the California energy crisis, the FERC adopted anumber of remedies to address flaws it found in the Californiamarkets and the governing rules. These actions led to the FERC'stermination of CalPX's rate schedules effective April 30, 2001.

After CalPX closed its markets, the FERC permitted CalPX tocharge "wind-up" rates to its former customers, which includedNEGT Energy Trading-Power, L.P., to fund its remainingactivities.

However, on July 9, 2004, the United States Court of Appeals forthe District of Columbia Circuit held that the "wind-up" rateswere a form of retroactive ratemaking, and that the method thatFERC had used to allocate the "windup" rates was unreasonable andviolated federal law.

Settlement Agreement

In light of the ruling of the D.C. Circuit and CalPX's resultinginability to fund its wind-up activities through involuntarycharges imposed upon its former customers, the parties commencedFERC-mediated settlement negotiations to attempt to arrive at aconsensual funding solution to allow CalPX to continue itswind-up activities on an orderly basis.

The negotiations culminated into a settlement agreement among theparties.

Generally, the Settlement Agreement allocates among the numerousCalPX participants what the Settlement Agreement defines as:

(a) Historical Costs -- payments made for all expenses from December 5, 2001 through December 31, 2004; and

The "necessary functions" related to the Going-Forward Costs are,inter alia:

(i) managing funds and assets held by CalPX;

(ii) maintaining CalPX's books and records, and performing ordinary business tasks to maintain corporate compliance; and

(iii) participating in litigation, with the advice and approval of CalPX Board.

CalPX and ET Power will mutually release each other from anyclaims either may have against the other.

Dennis J. Shaffer, Esq., at Whiteford, Taylor & Preston LLP, inBaltimore, Maryland, relates that CalPX's wind-up costs allocatedto ET Power under the Settlement Agreement, to the extent notsecured by amount owed to ET Power that are being held by CalPX,would constitute general unsecured, prepetition claims against ETPower. While CalPX contends that the wind-up cost claims areentitled to administrative priority, nothing in the SettlementAgreement or in a related letter agreement is prejudicial to ETPower's position with respect to this issue, Mr. Shaffer says.

Letter Agreement

In connection with the Settlement Agreement, CalPX and ET Poweralso entered into the Letter Agreement, subject to the Court'sand the FERC's approval. Pursuant to the Letter Agreement, interalia:

(i) ET Power agrees to reserve $150,000 in its reserve for disputed claims on account of potential wind-up costs owed by ET Power;

(ii) the parties agree that establishment of the Reserve will be without prejudice to the rights of any party with regard to the validity or priority of any claim; and

(iii) ET Power agrees not to pursue an objection of, or seek the estimation of, any claim by CalPX until at least December 31, 2005.

Mr. Shaffer points out that the Settlement Agreement provides afair method for allocating wind-up costs without the need forcostly and protracted litigation, thereby enabling ET Power tomaximize recoveries and expedite distributions to its creditors.In addition, the Letter Agreement avoids premature litigation ofclaims asserted by CalPX in ET Power's bankruptcy case. Overall,ET Power believes that the Agreements offer the most effectiveand equitable solution for resolving a complicated issueconfronting the estate.

NATIONAL ENERGY: Inks Pact Resolving Citibank Claim---------------------------------------------------Prior to the Petition Date, NEGT Energy Trading - Power, L.P.,was party to agreements providing for the sale and purchase ofgas and electricity with La Paloma Generating Company, LLC, andLake Road Generating, L.P. Dennis J. Shaffer, Esq., atWhiteford, Taylor & Preston, LLP, in Baltimore, Maryland, informsthe U.S. Bankruptcy Court for the Western District of Missourithat the Agreements were terminated in May 2003 and ET Poweragreed to make termination payments to the Project Companies.

Citibank, N.A., is the security agent under various loanagreements between certain lenders and investors, and the ProjectCompanies. Mr. Shaffer explains that Citibank, as security agentfor the Lenders, was granted a security interest in substantiallyall of the Project Companies' assets. The Project Companies'rights under the Agreements were assigned to Citibank.

Citibank filed Claim No. 322 against ET Power in an undeterminedamount to preserve the bank's rights under the Agreements andarising out of their termination.

Subsequently, in an effort to amicably settle all matters relatedto the Claim, ET Power and Citibank entered into a stipulationand agreed that:

(i) the Claim will be allowed as a general unsecured claim against ET Power for $5,500,000; and

(ii) the Allowed Claim will be treated as an Allowed Class 6 General Unsecured Claim against ET Power for all purposes, including distributions, in accordance with the ET and Quantum Debtors' Plan.

Mr. Shaffer asserts that the Stipulation, which is the result ofarm's-length negotiations between the parties, fairly resolvesthe Claim, without the need for costly litigation, which couldpotentially delay distributions to creditors.

1) advise the Debtor of its powers and duties as a debtor in its bankruptcy proceeding;

2) advise and consult the Debtor concerning questions arising in the conduct of the administration of its estate and concerning its rights and remedies with regard to the estate's assets and the claims of secured, preferred and unsecured creditors and other parties in interest;

3) assist in the preparation of pleadings, motions, notices and that are required for the orderly administration of the Debtor's estate;

4) consult and advise the Debtor in connection with the operation and management of its business and properties; and

5) perform all other legal services to the Debtor that are necessary in its chapter 11 case.

Wm. Stephen Reisz, Esq., a Member of Foley Bryant, is the leadattorney for the Debtor. Mr. Reisz disclosed that his Firmreceived a $6,000 retainer. Mr. Reisz charges $200 per hour forhis services.

Foley Bryant assured the Court that it does not represent anyinterest materially adverse to the Debtor or its estate.

Headquartered in Louisville, Kentucky, Omni Capital LimitedPartnership filed for chapter 11 protection on Sept. 9, 2005(Bankr. W.D. Ky. Case No. 05-36490). When the Debtor filed forprotection from its creditors, it listed estimated assets of$10 million to $50 million and estimated debts of $1 million to$10 million.

OMNI CAPITAL: Files Schedules of Assets and Liabilities-------------------------------------------------------Omni Capital Limited Partnership delivered its Schedules of Assetsand Liabilities to the U.S. Bankruptcy Court for the WesternDistrict of Kentucky, disclosing:

OWENS CORNING: Plans to Acquire Wolverine Fabricating-----------------------------------------------------Owens Corning has reached a tentative agreement to acquireWolverine Fabricating, Inc., a producer of side walls and otherproducts for the RV industry. Terms were not disclosed.

"This acquisition is a strategic addition to the Owens CorningFabwel business," said Chuck Jerasa, general manager - OwensCorning Fabwel. "The new combined product offering better servesour customers while extending our geographic reach to the WestCoast of the U.S. The addition of Wolverine will allow us toexpand our product offering and improve our market share withinthe RV industry. We are very excited about this opportunity andlook forward to working with Wolverine and its employees as weincrease our participation in the growing RV and cargo trailerindustries."

Steve Thomas, president - Wolverine, will remain as a key part ofthe Owens Corning Fabwel management team. "The leadership positionof Owens Corning Fabwel in the RV side-wall market carriesWolverine far beyond its own capability alone," said Thomas."This is a great opportunity for Wolverine to grow with a strongOwens Corning brand in the industry."

For the past 33 years, Owens Corning Fabwel has been the leadingmanufacturer and fabricator of RV components and side walls,providing integrated solutions for recreational vehicles, marineand transportation businesses worldwide. The company is afabricator of fiberglass, aluminum and steel products for supplyto the RV and cargo trailer industries.

OWENS CORNING: Wants to Capitalize Non-Debtor Company in China--------------------------------------------------------------Owens Corning has been developing a market in China for itsproducts since 1995 and continues to evaluate and analyze themarket in China for new opportunities. As of October 5, 2005,Owens Corning (China) Investment Company Ltd. -- Owens Corning'sindirect, wholly owned, non-debtor subsidiary in China -- hasestablished a series of non-debtor subsidiaries under the laws ofthe People's Republic of China to manufacture, market, distributeand sell the Company's products.

Despite its successes and growth in the Chinese markets, certainof Owens Corning's operations have been limited by variousrestrictions on foreign owned entities imposed by the Ministry ofCommerce of the People's Republic of China. Among other things,these restrictions limited the ability of the foreign ownedentities to import commodities and third parties' products forsale in China, or sell to Chinese customers goods containing apreponderance of third party's products. Those restrictions havelargely been lifted, after the People's Republic of China's entryinto the World Trade Organization in 2001.

Accordingly, Owens Corning has concluded that it can best takeadvantage of the increasingly permissive foreign investment andtrading climate in China by establishing a new "trading company"in accordance with the Management of Commercial Enterprises WithForeign Investment regulations promulgated on April 16, 2004, asMOFCOM Order [2004] No. 8.

J. Kate Stickles, Esq., at Saul Ewing LLP, in Wilmington,Delaware, tells the U.S. Bankruptcy Court for the District ofDelaware that unlike Owens Corning's existing affiliates in China,TradeCo. would have the corporate authorization, permits andlicenses required to:

-- toll-manufacture products;

-- import affiliates' or third parties' products for distribution and sale in China;

Ms. Stickles points out that to comply with the requirementsregarding "paid-in capital" and provide adequate working capitalfor its operations, TradeCo. must be capitalized with $1.5million, with 15% of the amount required promptly on formationand the balance due within two years thereafter. The funds wouldbe loaned by Owens Corning to Owens Corning China, and thencontributed by Owens Corning China to TradeCo.

PAETEC COMMS: Moody's Withdraws $200 Million Debts' B2 Ratings--------------------------------------------------------------Moody's Investors Service withdrew all ratings for PaetecCommunications, Inc. Due to unfavorable market conditions, thecompany recently decided not to proceed with its initial publicoffering and concurrent proposed $40 million 5-year senior securedrevolving credit facility and $160 million 6-year term loanfacility.

Moody's has withdrawn these ratings:

* Corporate Family Rating -- B2

* $40 million Senior Secured Revolving Credit Facility due 2010 -- B2

* $160 million Senior Secured Term Loan due 2011 -- B2

* Speculative Grade Liquidity -- SGL-1

Paetec, headquartered in Fairport, New York, is a competitivelocal exchange carrier and generated revenues of approximately$414 million in 2004.

POLYONE CORP: Thomas Waltermire Steps Down as President & CEO-------------------------------------------------------------PolyOne Corporation (NYSE: POL) disclosed that Thomas A.Waltermire has stepped down as the company's president, chiefexecutive officer and director, effective immediately.

The board has asked William F. Patient, non-executive chairman ofthe board, to serve as interim chief executive officer until apermanent successor is named.

Mr. Waltermire stated, "As the company enters the next phase ofits strategic evolution, the Board and I agree that the time isright for new leadership. I take pride in our manyaccomplishments, starting with the creation of PolyOne, and I wishmy colleagues the best of luck in the future."

Mr. Patient added, "The board understands Tom's difficult butreasoned decision that now is an appropriate time for a change inleadership. During his tenure, we have made significant progresson many fronts, including improvement of our core businesses,divestiture of our non-core assets, achievement of our targetedcost structure and investment in our people. We believe thatPolyOne is positioned for future growth and profitability.

"As PolyOne's leader since its formation five years ago, Tom hasplayed a vital role in the Company's transformation. On behalf ofthe entire board, I would like to thank him for his many years ofdedicated service," Mr. Patient added.

PolyOne will begin its search for a permanent chairman and chiefexecutive immediately. The board has retained the globalexecutive search firm, Russell Reynolds Associates, to conduct thesearch. The Company anticipates completing the process by early2006.

During the decade of the 1990s, Mr. Patient helped to transformThe Geon Company, one of PolyOne's predecessor companies, into anindustry leader in polymers. He retired in 1999 as chairman andchief executive officer. He joined PolyOne's Board of Directorsas non-executive chairman in November 2003.

Mr. Waltermire became chairman and chief executive officer ofPolyOne in September 2000, with the consolidation of The GeonCompany and M.A. Hanna Corporation. His title became presidentand CEO in November 2003, when Mr. Patient joined PolyOne's boardas non-executive chairman. Prior to PolyOne, Mr. Waltermireserved in a variety of positions with The Geon Company, beginningin 1993 and culminating in his being named chairman and CEO in May1999. He began his career with The BF Goodrich Company.

Headquartered in northeast Ohio, PolyOne Corporation -- http://www.polyone.com/-- is a leading global compounding and North American distribution company with continuing operations inthermoplastic compounds, specialty polymer formulations, color andadditive systems, and thermoplastic resin distribution. PolyOne,with 2004 annual revenues of approximately $2.2 billion, hasemployees at manufacturing sites in North America, Europe, Asiaand Australia, and joint ventures in North America and SouthAmerica.

* * *

As reported in the Troubled Company Reporter on July 5, 2005,Fitch Ratings has affirmed PolyOne Corporation's credit ratings at'BB-' for the senior secured credit facility rating and 'B' forthe senior unsecured debt. Fitch said the rating outlook isstable.

PONDEROSA PINE: Files Joint Plan of Reorganization in New Jersey----------------------------------------------------------------Ponderosa Pine Energy, Inc., and its debtor-affiliates delivered aJoint Plan of Reorganization and accompanying Disclosure Statementto the U.S. Bankruptcy Court for the District of New Jersey onOct. 7, 2005.

The Reorganized Debtors will make payments in accordance with theterms of the Plan from existing cash balances, cash generated fromoperations, net proceeds from causes of action and an exit loanfrom an undisclosed lender.

Delta Power will make a capital contribution of not less than$1,000,000. The contribution may be in cash or forgiveness ofadministrative claims.

Headquartered in Morristown, New Jersey, Ponderosa Pine Energy,LLC, and its affiliates are utility companies that supplyelectricity and steam. The Company and its debtor-affiliatesfiled for chapter 11 protection on April 14, 2005 (Bankr. D. N.J.Case No. 05-22068). Mary E. Seymour, Esq., and Sharon L. Levine,Esq., at Lowenstein Sandler PC represent the Debtor in theirrestructuring efforts. When the Debtors filed for protection fromtheir creditors, they listed estimated assets and debts of morethan $100 million.

POP3 MEDIA: Can't File Annual Report on Time Due to Audit Review----------------------------------------------------------------Pop3 Media Corporation, fka ViaStar Holdings, Inc., informed theSecurities and Exchange Commission that it could not timely fileits annual report on Form 10-KSB for the fiscal year endedJune 30, 2005, because its independent auditor had not been ableto complete its review of the financial statements in time for thefiling deadline.

Amended Quarterly Report

The Company delivered its amended quarterly report on Form 10-QSB/A for the three-months ended March 31, 2005, to the Securitiesand Exchange Commission on Sept. 14, 2005.

For the quarter ended March 31, 2005, Pop3 Media incurred a$7,101,776 net loss, compared to a $1,023,458 net loss for thesame period ended March 31, 2004. The increased loss isattributed to the Company's decision to write off approximately$6,466,860 of the retail distribution agreements it acquired fromLevel X Media Corporation in 2003. The Company impaired itsdistribution agreements in June 2005 upon the recommendation ofits independent registered accountant and legal counsel.

Pop3 Media has accumulated a $13,852,323 loss since inception.Recurring losses coupled with the risks associated with raisingcapital through the issuance of equity or debt securities, createsuncertainty as to the Company's ability to continue as a goingconcern.

Armando Ibarra, CPA, expressed substantial doubt about Pop3Media's ability to continue as a going concern after it auditedthe Company's consolidated balance sheets as of June 30, 2003 andDecember 31, 2002, and the related consolidated statements ofoperations, cash flows and stockholders' equity for the six monthsended June 30, 2003 and 2002. Mr. Ibarra pointed to the Company'srecurring losses.

Pop3 Media -- http://www.pop3media.com/-- is engaged in the development, production and distribution of entertainment relatedmedia for film, television, music and publishing interests. TheCompany distributes its products to over 20,000 retail outletsnationwide and globally. The Company's portfolio currentlyincludes ownership of ViaStar Distribution Group, A.V.O. Studios,Moving Pictures International, ViaStar Records, Quadra Records,Light of the Spirit Records, and ViaStar Classical, ViaStar ArtistManagement group and Masterdisk Corporation.

This is the company's third cash collateral request. The Courtgranted the Debtor's initial request to use the cash collateralfor a 16-week period through July 9, 2005, and granted a second16-week extension through Oct. 29, 2005.

The Debtor's indebtedness to Gold Mountain stems from a loan for$24,500,000. The Debtor granted Gold Mountain a lien and securityinterest on some tide and submerged lands located within the Cityof Long Beach and some personal property.

The parties stipulate that the Debtor can continue using the cashcollateral and will make three interest payments:

To provide the lenders with adequate protection required undersection 363 of the U.S. Bankruptcy Code for any dimunition in thevalue of their collateral, the Debtor will grant them areplacement lien to the same extent, validity and security as theprepetition lien.

The Debtor will use the cash collateral to fund its operations,payroll, and other operating expenses that are necessary tomaintain the value of the estate.

RADNOR HOLDINGS: Paul Ridder Replaces Michael Valenza as CFO------------------------------------------------------------ Radnor Holdings Corporation launched its strategic supply chainmanagement initiative. Michael V. Valenza, the former ChiefFinancial Officer of the Company, will lead the initiative andwill be responsible for all aspects of supply chain management.Paul D. Ridder, the former Corporate Controller, has beenappointed the Chief Financial Officer of the Company.

"As a result of rapid growth and new product introductions, supplychain management has become a primary focus of our Company. Theinitiative will coordinate purchasing, forecasting and logistics,products planning, and customer service. Measuring ourperformance and providing leadership, as well as training, inthese key areas will be the cornerstone to our success as wecontinue to grow our business. We are excited about our futureand grateful for Michael's and Paul's leadership to ourorganization," said Michael T. Kennedy, Radnor's Chairman andChief Executive Officer.

Mr. Valenza has been with the Company for thirteen years and hassignificant experience in the areas of forecasting, purchasing andlogistics. Prior to joining Radnor, Mr. Valenza served in severalpositions with Arthur Andersen LLP, most recently as a Manager inthe Enterprise Group. Mr. Valenza earned a B.S. and M.A. inAccounting from Utah State University.

Mr. Ridder has been with the Company for nine years and has servedas Manager of Financial Reporting and most recently as VicePresident and Corporate Controller. Prior to joining Radnor, Mr.Ridder held various positions at PricewaterhouseCoopers LLP. Mr.Ridder received his B.S. in Business Administration from BucknellUniversity and earned his MBA from Villanova University.

In addition, Michael P. Feehan will become Corporate Controller ofthe Company. Mr. Feehan joined the Company in 2004 as Director ofFinance. Prior to joining Radnor, Mr. Feehan held variouspositions at Arthur Andersen LLP and KPMG LLP, most recently as anAudit Manager. Mr. Feehan received a B.S. in BusinessAdministration from the University of Notre Dame and is currentlypursuing his MBA from Villanova University.

Radnor Holdings Corporation -- http://www.radnorholdings.com/-- is a leading manufacturer and distributor of a broad line ofdisposable foodservice products in the United States and specialtychemical products worldwide. The Company operates 15 plants inNorth America and 3 in Europe and distributes its foodserviceproducts from 10 distribution centers throughout the UnitedStates.

Assuming that neither significant litigation nor objections arefiled with respect to the Plan and assuming the Plan is confirmedby November 30, 2005, the Creditors' Committee estimates thatunpaid Professional Compensation and Reimbursement Claims as ofthe Effective Date should approximate $2,000,000.

Class 3 Claims

Under the First Amended Plan, holders of claims in Classes 3a,3b, and 3c will be deemed to assign any D&O Litigation Claims andCreditor Litigation Claims they may have to RGH, on the EffectiveDate. To the extent the Holders "opt-out" of assigning their D&OLitigation Claims and Creditor Litigation Claims to the Debtor,the Holders will not be entitled to receive certain distributionspursuant to the Plan.

Holders of Class 3a and 3b Claims will separately indicatewhether they wish to elect to opt out of assigning their D&OLitigation Claims and Creditor Litigation Claims to the Debtorand return duly completed election forms to the appropriateRecord Holder. The elections must be received by the RecordHolder in sufficient time for the Record Holder to deliver,electronically, the securities to the account established forthat purpose, by the October 28, 2005 Voting Deadline.

Mr. Gulkowitz notes that any Holder of a Claim or Claims in Class3c that executes a Ballot, but does not indicate on the Ballotthat the Holder elects to opt out of assigning its D&O LitigationClaims and Creditor Litigation Claims to the Debtor, and anyHolder of a Claim or Claims in Class 3a or 3b whose Record Holderfails to deliver the securities to the account established forthat purpose, will be deemed to have consented to the assignmentof its D&O Litigation Claims and Creditor Litigation Claims, ifany, to the Debtor, as of the Effective Date.

Furthermore, subject to, and upon the occurrence of, theSecurities Class Action Settlement, Holders of Class 3a and Class3b Claims that are not Opt-Out Claimants and who could be classmembers in the Securities Class Action, including any members whorequest exclusion from the class, release the current and formerdirectors, officers and employees of the Debtor and RelianceFinancial Services Corporation from and any all claims assertedin the Securities Class Action.

Mr. Gulkowitz asserts that Holders of Class 3a and 3b Claims thatdo not want to participate in the Securities Class ActionSettlement, and would, therefore, wish to retain the claimsasserted in the Securities Class Action, should consider theirdecision not to be an Opt-Out Claimant.

No Solicitation

The Creditors' Committee will not solicit votes on the Plan fromholders of Classified Priority Claims, Secured Claims,Subordinated Claims and Equity Interests because theseClaimholders are either Unimpaired or deemed to reject the Plan.Ballots will not be transmitted to them, Mr. Gulkowitz says.

Voting Procedures

After reviewing the Disclosure Statement, each Voting Party isinstructed to:

* vote using the enclosed form of ballot;

* check the box to accept or reject the Plan;

* check the box to opt out of assigning D&O Litigation Claims and Creditor Litigation Claims to RGH; and

* return the Ballot in the pre-addressed envelope.

Voting Parties must allow ample time for the Ballot to bereceived by the Record Holder and processed on a Master Ballot.Ballots must be sent to the Voting Agent:

Bankruptcy Services LLC c/o Financial Balloting Group 757 Third Avenue New York, New York 10017-2072 Attention: Reliance Group Holdings

In accordance with the First Amended Plan's provisions forassumption and rejection of executory contracts, the LiquidatingTrust will be substituted for RGH and the Creditors' Committee.The Liquidating Trust will perform and succeed to all of RGH'sand the Creditors' Committee's rights and obligations under theAssumed Contracts, including the RGH/RFSC Settlement Term Sheet,the PA Settlement Agreement, the Senior Secured Credit Agreement,the Tax Sharing Agreement and the D&O Settlement Agreement.

Additionally, the Liquidating Trust will be substituted as aparty for the Bank Committee and will perform and succeed to allof the Bank Committee's rights and obligations under the PASettlement Agreement, except to the extent the rights andobligations have been, or are to be, performed or succeeded to byReorganized RFSC.

Releases

Subject to the occurrence of the "effective date," as that termis used in the D&O Settlement, the release by RGH will include,but will not be limited to, the release of the current and formerdirectors, officers and employees of RGH and RFSC, to the extentprovided for in the D&O Settlement, of the D&O Litigation Claimsand the Creditor Litigation Claims assigned to RGH pursuant tothe Plan.

Nothing in the First Amended Plan is intended to affect thecontinued prosecution of any former or pending actions beingprosecuted by the Liquidator, other than to give effect to theMutual Release attached to the D&O Settlement Agreement, or toaffect the capacity of the Liquidator to prosecute any otherclaims or causes of action in the future other than those held bythe Liquidator as a result of being a creditor of RGH.

REVLON INC: Registers Common Stock for $250 Million IPO-------------------------------------------------------Revlon, Inc., filed a Registration Statement with the Securitiesand Exchange Commission for the sale of its Class A shares ofcommon stock. The aggregate initial public offering price of allsecurities that may be offered pursuant to the Prospectus filedwith the SEC will not exceed $250 million.

The net proceeds will be used for general corporate purposes,including the repayment of outstanding debt, for working capitalor capital expenditures.

Revlon is currently authorized to issue:

* 900 million shares of Revlon Class A common stock, par value $.01 per share,

* 200 million shares of its Class B common stock, or Revlon Class B common stock, par value $.01 per share; and

* 20 million shares of preferred stock, par value $.01 per

As of June 30, 2005, Revlon had outstanding:

-- 340,175,694 shares of Revlon Class A common stock; and -- 31,250,000 shares of Revlon Class B common stock;

all of which are currently owned by MacAndrews & Forbes.

The holders of Revlon Class A common stock and Revlon Class Bcommon stock are entitled to receive dividends and otherdistributions as may be declared by Revlon's board of directorsout of assets or funds legally available for that purpose,

The Company's common shares trade at the New York Stock Exchangeunder the symbol "REV". The Company's common shares trade between$2.94 and $3.10 this month.

Revlon Inc. is a worldwide cosmetics, skin care, fragrance, andpersonal care products company. The Company's vision is todeliver the promise of beauty through creating and developing themost consumer preferred brands. Websites featuring currentproduct and promotional information can be reached athttp://www.revlon.com/and http://www.almay.com/ Corporate and investor relations information can be accessed athttp://www.revloninc.com/ The Company's brands, which are sold worldwide, include Revlon(R), Almay(R), Ultima(R), Charlie(R),Flex(R), and Mitchum(R).

As of June 30, 2005, Revlon's equity deficit widened to$1.1 billion from a $1.02 billion deficit at Dec. 31, 2004.

RHODES COMPANIES: Moody's Rates Planned $150 Million Loan at B1---------------------------------------------------------------Moody's Investors Service assigned first-time ratings to TheRhodes Companies, LLC, including a B1 Corporate Family Rating, aBa3 rating on the proposed $450 million senior secured first lienterm loan, and a B1 rating on the proposed $150 million seniorsecured second lien term loan. The ratings outlook is stable.

The stable ratings outlook is based on Moody's expectation that:

1) the company will maintain generally level collateral coverage through 2007 before beginning gradually to reduce debt/total net value in 2008 and beyond; and

2) the estimated $280+ million of cash on hand after the close of the transaction will be used largely for seasonal working capital needs and for future land purchases which will be added to the collateral package.

Pro forma for the takedown of $600 million of first and secondlien term loans, repayment of $211 million of existing debt,addition of $275 million to the company's cash balances, paymentof a $100 million dividend to the owners, and funding of $13.5million of transaction fees and expenses, the debt leveragemetrics as of year-end 2005 are expected to be approximately:

Adjusted debt metrics as of the same date, after adding $89.5million to the consolidated debt totals for specific performanceoptions that the company has in its Tuscany master plannedcommunity, would be approximately:

The debt/cap and debt/EBITDA metrics, by which traditionalhomebuilders are measured, are aggressive for the rating. Thedebt/net value calculations, by which land developers aremeasured, are reasonably strong for the rating.

Founded in 1992, Rhodes Homes conducts land development andhomebuilding operations in two master planned communities and oneplanned area development in Las Vegas and is building a base fordeveloping a Las Vegas bedroom community in Kingman, Arizona.This geographic concentration, plus the company's relativelylimited product and price point diversity as well as its overallsmall relative size, make the company more susceptible to acyclical industry downturn and/or regional downturn than its muchlarger competitors.

The Las Vegas housing market has experienced very rapid priceappreciation in recent years, most significantly in the past twoyears. As a result, speculative buying and flipping haveincreased, leading to an increase in the number of resales on themarket that are competing with new home sales and causing at leastone homebuilder (Pulte) to have to give back some of its 2004price increases in order to drive cancellation rates back down tomore normal levels. Rhodes Homes was affected by the fallout fromthe Pulte action, saw its own cancellation rates soar, and hadfewer deliveries and lower revenues and EBITDA in 2004 as comparedto 2003. The company has since instituted stiffer underwritingand down payment requirements and has seen a strong recovery inyear-to-date 2005 results.

On the plus side, Rhodes Homes' land and home inventory was valuedby Cushman & Wakefield in September 2005 at a Total Net Value ofapproximately $1.6 billion. As a result, substantial collateralprotection for both the first and second lien term loans.

Las Vegas has consistently been one of the strongest residentialhousing markets in the country with lot supply being constrainedby the timing of land sales by the Bureau of Land Management,which is the dominant land owner in the area.

The company's two largest master planned communities, Rhodes Ranchand Tuscany, have been under development since the mid-1990's. Todate, the company has invested approximately $335 million in land,infrastructure buildup, and amenities.

Rhodes Homes' pre-transaction metrics were very strong for theratings, with:

* interest coverage rising from 4x to 11x;

* debt/capitalization falling from 77% to 62%;

* debt/EBITDA declining from 3.8x to 3.4x; and

* gross margins soaring from 37% to 49% over the three-year period 2002-2004.

The $450 million senior secured first lien term loan will maturein 2010 and will benefit from a first lien on substantially allthe property of The Rhodes Companies, LLC and its co-borrowers,excepting entities that hold unentitled land. In addition, therewill be a 100% excess cash flow sweep in place until half of thetotal debt outstanding at closing is repaid and total debt/totalnet value falls below 30% (i.e., when the "trigger date" isreached), at which point the excess cash flow sweep drops down toa 50% rate. A tight restricted payments basket, which permitsdistributions to pay the taxes of the owners plus up to anadditional $2.5 million per year until the trigger date is reached(after which distributions can be up to half of excess cash flow),offers additional protection.

The $150 million senior secured second lien term loan will maturein 2011 and benefit from a second lien on substantially all of theproperty of The Rhodes Companies, LLC and its co-borrowers,excepting entities that hold unentitled land. In addition, therewill be additional financial covenants, governing both loans, inthe form of first lien debt and total debt/total net value testsand a Cash EBITDA/Cash Interest coverage test. These additionalcovenants are still being negotiated.

Going forward, the ratings and outlook would be strengthened by:

* a significant build-up in the company's equity base; * successful diversification into other markets; and/or * a permanent reduction in the company's debt leverage metrics.

The ratings and outlook would be stressed by:

* a misstep in the company's expansion process;

* a significant increase in debt leverage; or

* use of the $280+ million current cash balances for anything other than seasonal working capital needs and additional land purchases that would be added to the collateral package.

Headquartered in Las Vegas, Nevada, The Rhodes Companies, LLC andits co-borrowers (Heritage Land Company, LLC and Rhodes RanchGeneral Partnership) comprise the largest private communitydeveloper and homebuilder in Las Vegas. Projected revenues andEBITDA for the year that will end December 31, 2005 are $262million and $103 million, respectively.

RISK MANAGEMENT: Has Until Nov. 4 to Decide on Leases-----------------------------------------------------The U.S. Bankruptcy Court for the Northern District of Ohio,Eastern Division, extended until Nov. 4, 2005, the period withinwhich Risk Management Alternatives, Inc., and its debtor-affiliates can elect to assume, assume and assign, or reject 20unexpired non-residential real property leases.

The Debtors told the Bankruptcy Court that they have been unableto sufficiently review the importance of these leases to theirreorganization because they have focused their time on operatingtheir businesses and negotiating a sale of substantially all oftheir assets to NCO Group, Inc.

Matthew A. Salerno, Esq., at McDonald Hopkins Co., LPA, relatedthat the leases are essential assets of the Debtors' estates andintegral to the continued operation of their businesses in theface of an impending sale. Mr. Salerno explains that theextension will give the Debtors more time to make an intelligentdecision as to which of these leases to assume or reject.

The Debtors assured the Bankruptcy Court that the requestedextension will not prejudice any of their lessors because they arecurrent and will continue to pay all postpetition rent.

A list of the Debtor's unexpired non-residential real propertyleases is available for free at:

Headquartered in Duluth, Georgia, Risk Management Alternatives,Inc. -- http://www.rmainc.net/-- provides consumer and commercial debt collections, accounts receivable management, call centeroperations, and other back-office support to firms in thefinancial services, telecommunications, utilities, and healthcaresectors, as well as government entities. The Company and tenaffiliates filed for chapter 11 protection on July 7, 2005 (Bankr.N.D. Ohio Case Nos. 05-43959 through 05-43969). Shawn M. Riley,Esq., at McDonald, Hopkins, Burke & Haber Co., LPA, represents theDebtors in their chapter 11 proceedings. When the Debtors filedfor protection from their creditors, they estimated more than $100million in assets and between $50 million to $100 million indebts.

RISK MANAGEMENT: Removal Period Stretched to April 7----------------------------------------------------The U.S. Bankruptcy Court for the Northern District of Ohio,extended to Apr. 7, 2006, the period in which Risk ManagementAlternatives, Inc., and its debtor-affiliates' can removeprepetition civil actions pending in various state and federalcourts.

The Debtors told the Court that during the early stages of theirchapter 11 cases, they were unable to have an opportunity toevaluate the actions and determine which they will seek to remove.The Debtors said that following their filings, they focused theirenergy and resources on:

* streamlining their business operations; and

* maintaining their relationships with their vendors and customers.

Most recently, the Debtors said, they have been focused onnegotiating and preparing for a sale of substantially all of theirassets.

The Debtors told the Court that the extension will afford themsufficient opportunity to make fully informed decisions concerningthe removal of each action.

Headquartered in Duluth, Georgia, Risk Management Alternatives,Inc. -- http://www.rmainc.net/-- provides consumer and commercial debt collections, accounts receivable management, call centeroperations, and other back-office support to firms in thefinancial services, telecommunications, utilities, and healthcaresectors, as well as government entities. The Company and tenaffiliates filed for chapter 11 protection on July 7, 2005 (Bankr.N.D. Ohio Case Nos. 05-43959 through 05-43969). Shawn M. Riley,Esq., at McDonald, Hopkins, Burke & Haber Co., LPA, represents theDebtors in their chapter 11 proceedings. When the Debtors filedfor protection from their creditors, they estimated more than $100million in assets and between $50 million to $100 million indebts.

SAINT VINCENTS: Court Allows Govt. Fund Reallocation----------------------------------------------------The Hon. Prudence Carter Beatty of the U.S. Bankruptcy Court forthe Southern District of New York granted Saint Vincents CatholicMedical Centers of New York and its debtor-affiliates request to:

(a) modify an application for a government grant to obtain $700,000, which sum was originally earmarked for employee retraining and to which, as a result of the closing of St. Mary's Hospital in Brooklyn, New York, the Debtors would not otherwise be entitled;

(b) transfer $700,000 to the League/1199 SEIU Training and Upgrading Fund and the Registered Nurse Training and Upgrading Fund, to facilitate the retraining of union employees from St. Mary's; and

(c) cooperate in the reallocation of $600,000 of the grant to institutions other than St. Mary's to support training of former St. Mary's employees who are currently enrolled in nursing, radiology, physician assistant, and social work programs.

As reported in the Troubled Company Reporter, the Community HealthCare Conversion Demonstration Project grants are available tosupport workforce retraining, primary care expansion and otherinitiatives, which will enable hospitals and their community-based partners to transition to a managed care environment

Due to the closure of St. Mary's the Debtors had asked for the re-allocation of the funds to other hospitals who will be responsibleof funding the participation of former St. Mary's employeescurrently enrolled in nursing and other programs.

Clarifications

At the behest of the New York State Department of Health, theDebtors provided these clarifications in connection with theproposed transfer.

(a) Before the DOH reallocates any portion of the funds awarded to St. Mary's Hospital of Brooklyn, New York, by the Community Health Care Conversion Demonstration Project the DOH has to have approval from the League/1199 SEIU Training and Upgrading Fund and the Registered Nurse Training and Upgrading Fund of the reallocation, and receive documentation from the Hospital that it incurred infrastructure spending prior to St. Mary's closure and during the applicable contract period for the CHCCDP Grant;

(b) The reallocation of the grant funds is subject to the DOH's review of the reallocation request and supporting documentation in conformance with the terms, conditions and operational protocols of the CHCCDP;

(c) With respect to the Debtors' intent to cooperate with the DOH and others in the hope that $600,000 of the CHCCDP Grant can be allocated to other hospitals, the Debtors understand that:

-- funds are allocated to institutions that provide training and are not directly allocated to individual employees;

-- as a result, the funds will not necessarily follow the former St. Mary's Hospital employees; and

-- any reallocation of the $600,000 will be made in conformance with the terms, conditions and operational protocols of the CHCCDP;

(d) Unless the grant is reallocated as the Debtors intend to request, those funds will be "forfeited." That, with respect to the $700,000, the process will ensure that an equal amount of value will be directed to the former employees of St. Mary's. The Debtors do not suggest that the funds would not be utilized to support the CHCCDP program generally; and

(e) Any of the St. Mary's CHCCDP Grant that they do not use will be reallocated to other hospitals in conformance with the terms, conditions and operational protocols of CHCCDP.

Headquartered in New York, New York, Saint Vincents CatholicMedical Centers of New York -- http://www.svcmc.org/-- the largest Catholic healthcare providers in New York State, operatehospitals, health centers, nursing homes and a home health agency.The hospital group consists of seven hospitals located throughoutBrooklyn, Queens, Manhattan, and Staten Island, along with fournursing homes and a home health care agency. The Company and sixof its affiliates filed for chapter 11 protection on July 5, 2005(Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). GaryRavert, Esq., and Stephen B. Selbst, Esq., at McDermott Will &Emery, LLP, represent the Debtors in their restructuring efforts.As of Apr. 30, 2005, the Debtors listed $972 million in totalassets and $1 billion in total debts. (Saint Vincent BankruptcyNews, Issue No. 12; Bankruptcy Creditors' Service, Inc.,215/945-7000)

SAINT VINCENTS: K. Falk Wants St. Mary's Closure Order Stayed-------------------------------------------------------------Kenneth Falk asks the U.S. Bankruptcy Court for the SouthernDistrict of New York to stay its previous order approving theclosure of St. Mary's Hospital of Brooklyn, New York, until thehearing of an Order to Show Cause dated September 23, 2005.

As reported in the Troubled Company Reporter St. Mary's approvedclosure plan calls for the phased closing of all services at thefacility by October 4, with the exception of the outpatient familyhealth center located at the hospital, which will transitionpatients over 60-90 days to one of the other family healthcenters.

As approved by DOH, the hospital will immediately curtailadmissions to St. Mary's, stop scheduling surgeries and begin theprocess of compressing and closing inpatient departments.

Mr. Falk's Objection

The death rate in Brownsville, Brooklyn, is 31% higher than all ofNew York, yet St. Mary's and Brookdale are the only two hospitalsin that community, Mr. Falk explained in a handwritten letter,dated Sept. 28, 2005.

"The rate of deaths for infants was 12.2 deaths per 1000 births.More will die," he says.

Mr. Falk has attached to the Stay Request an assortment of maps,correspondence and newspaper articles relating to the closure ofSt. Mary's Hospital.

Among the correspondence is a letter, dated September 30, 2005,from Khidmah Corporation to the Court expressing an interest andan ability "to purchase St. Mary's Hospital in its entirety" for$25 million.

In the September 30 Letter, Lateef Sadiq, president of Khidmah,said the company has a $3 million housing project on 1515-27 St.Johns place. Mr. Sadiq said Khidmah has funds to purchase St.Mary's Hospital. He promised to show financial proof if theCourt allots Khidmah time to contact its bankers.

Mr. Sadiq said he has communicated with members of the BrooklynSafety Net, Gerard Connelly, CEO of St. Mary's Hospital andEugene Colon, legal advisor of St. Vincent's Hospital. He evensigned a confidentiality letter in July, but St. Vincent's nevercontacted him.

Mr. Troop reiterates that the BSN proposal was not in the bestinterest of the Debtors' estates because, among other reasons:

(a) there was significant risk that the New York State Department of Health would not approve a license to BSN for the continued operation of St. Mary's; and

(b) BSN did not appear to fully apprehend the operational requirements of owning and operating an acute care facility, including the cost and provision of malpractice insurance and receivables financing.

According to Mr. Troop, SVCMC could not be expected to bear thesecosts without, at a minimum, BSN funding St. Mary's $500,000-a-week losses.

On the other hand, SVCMC would need to obtain a purchase pricefor St. Mary's Hospital of at least $65 million to offset thelikely base economic benefits to the estates from proceeding withthe proposed closure of the Hospital and the sale of its campus.

Mr. Troop says closing the Hospital would result to grossproceeds of:

-- $25 million from the sale of the St. Mary's campus based on current negotiations with a financially capable developer;

-- $25 million in present value based on the $3 million per year income stream to be received by SVCMC from the behavioral health outpatient clinics to be retained and operated by SVCMC after St. Mary's closure; and

-- $15 million in realizable value from the $20 million in accounts receivable.

Mr. Troop explains that while the Khidmah Letter could beconstrued as reducing the execution risk that BSN could actuallyraise $25 million, it does not address fundamental problems withthe BSN proposal, that is, BSN has not demonstrated the abilityto obtain regulatory approval to operate a hospital and the BSNproposal is at least $20 million too low for SVCMC, consistentwith its fiduciary duties to creditors, to accept.

Mr. Troop notes that Khidmah failed to provide that it has alicense to run or has experience running a hospital.

Accordingly, the Debtors did not pursue Khidmah; they pursuedpossible transactions with other entities that could continueoperations of the Hospital with some certainty.

Nevertheless, the Debtors' investment bankers, Cain Brothers &Company, LLC, have contacted Lateef Sadiq, the president ofKhidmah, to coordinate the execution of a nondisclosure agreementand access to the Debtors' "virtual" data room so that Khidmahmay participate in the auction for the St. Mary's campus, Mr.Troop informs the Court.

In the event Khidmah is the highest and best bidder for the St.Mary's campus, it will be free, subject to regulatory approval,to seek to re-open the hospital, according to Mr. Troop.

Mr. Troop maintains that nothing raised by the Stay Requestjustifies a change of course. Thus, it should be denied.

Mr. Troop also notes that the Debtors have reviewed the docket oftheir chapter 11 cases and cannot locate an order to show causefiled. Presumably, Mr. Troop says, the "order to show cause" towhich the Stay Request refers is the unsigned and undatedReconsideration Request, which has already been denied.

Headquartered in New York, New York, Saint Vincents CatholicMedical Centers of New York -- http://www.svcmc.org/-- the largest Catholic healthcare providers in New York State, operatehospitals, health centers, nursing homes and a home health agency.The hospital group consists of seven hospitals located throughoutBrooklyn, Queens, Manhattan, and Staten Island, along with fournursing homes and a home health care agency. The Company and sixof its affiliates filed for chapter 11 protection on July 5, 2005(Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). GaryRavert, Esq., and Stephen B. Selbst, Esq., at McDermott Will &Emery, LLP, represent the Debtors in their restructuring efforts.As of Apr. 30, 2005, the Debtors listed $972 million in totalassets and $1 billion in total debts. (Saint Vincent BankruptcyNews, Issue No. 11; Bankruptcy Creditors' Service, Inc.,215/945-7000)

SATMEX: White & Case Partner Thomas Heather Appointed as Mediator-----------------------------------------------------------------White & Case partner Thomas S. Heather has been appointed byMexico's Communications Ministry to serve as mediator in thecomplex restructuring of Satmex, the Mexican satellite company, inorder to accelerate the insolvency process. The matter isconsidered to be one of the first major Mexico-US cross-borderinsolvency cases.

"Satmex has until October 31 to present a draft restructuring planin the New York court. Failing to meet the deadline without someshow of advancement could result in the case being reheard beforeJudge Robert Drain of US Bankruptcy Court of the Southern Districtof New York where creditors had filed an involuntary Chapter 11proceeding, but was then dismissed," Mr. Heather said. "Suchlitigation could be costly in many ways to all parties involved,so my job is to help move the process forward as efficiently aspossible with a plan that works for everyone."

Mr. Heather, who is based in White & Case's Mexico City office,has more than 20 years experience in the areas of restructurings,mergers and acquisitions, banking, securities and corporategovernance. A co-founder and immediate past chair of the MexicanMediation Institute, Heather chairs the Financial Law Section ofthe Mexican Bar Association and is a member of the Board of theMexican Institute of Corporate Governance. In addition, Heatherhas been at the forefront of significant alternative disputeresolution and trade-related initiatives. He participated in theNAFTA negotiations with respect to the Financial Services Chapter,and has been selected on several occasions as an arbitrator by theICC Court of International Arbitration in Paris. He has served onseveral boards of leading corporations and financial institutionsand has lectured extensively in Mexico and in the US. The Mexicanmagazine Lawyers World (El Mundo del Abogado) named him one of"Mexico's Top 100 Lawyers-2005."

Mr. Heather's first task will be to oversee the proof of claimsprocess to make sure all the creditors' claims have been properlyidentified and are valid. Mr. Heather will also oversee Satmex'sfinancial reporting as agreed upon by the company and itscreditors, who are mostly US-based investors. Mexican law doesnot require companies undergoing reorganization to make anyinformation available to creditors, which is unacceptable toSatmex's US investors.

The Mexican government is a shareholder of Satmex, a creditor of aSatmex holding company, a regulator of the satellite industry aswell as the owner of the satellite concession that is the key toSatmex's business. Both the creditors and Satmex's shareholdershave been frustrated by the lack of progress in the restructuringtalks, which is why the Ministry made the bold move of appointingan experienced insolvency lawyer with significant cross-borderexperience to jumpstart the negotiations.

Court documents indicate that one reason for the breakdown intalks has been the Mexican government desire to include themenoscabo, a conditional indebtedness incurred by Satmex's parenton behalf of the Mexican government which allowed the new ownersof SatMex to leverage their investment in a previously debt-freecompany.

"All issues related to the complex bankruptcy must be analyzedcarefully from each stakeholders' point of view. This will be noeasy task given that there is a parallel US proceeding in NewYork, SatMex has several concessions to deal with and the companyitself is vital to keeping Mexico operating effectively due toSatMex's communications purpose. Resolving the matter is alsocompounded by the fact that creditors hold both private andpublicly placed debt in the US capital markets and the bankruptcyinvolves a number of complex issues in multiple jurisdictionsinvolving different agencies even within Mexico," Mr. Heathersaid.

About White & Case

White & Case recently was involved in another milestone bankruptcyin Mexico, representing paper conglomerate Corporacion Durango,S.A. de C.V. in its restructuring of more than $800 million ofunsecured debt, marking the largest reorganization to date underMexico's new bankruptcy act.

With more than 150 restructuring and bankruptcy lawyers in 25countries, White & Case has long been recognized as a leader incomplex cross-border insolvencies and workouts such as the Satmexmatter. The Firm is serving as key advisors and litigators insome of the most high-profile restructurings, including Asia Pulp& Paper, SK Global, United Pan-Europe Communications and Mirant,generally regarded as one the of most complex Chapter 11 cases inrecent years with pre-petition litigation that includes more than200 matters with a total value exceeding $20 billion.

White & Case LLP is a leading global law firm with nearly 1,900lawyers in 38 offices in 25 countries. Our clients value both thebreadth of our network and depth of our US, English and local lawcapabilities in each of our offices and rely on us for theircomplex cross-border commercial and financial transactions and forinternational arbitration and litigation. Whether in establishedor emerging markets, the hallmark of White & Case is our completededication to the business priorities and legal needs of ourclients.

SAVVIS INC: Has Until Apr. 3 to Regain Nasdaq Compliance-------------------------------------------------------- SAVVIS, Inc. (NASDAQ:SVVS) received a letter from The Nasdaq StockMarket advising that the company has 180 days, until April 3,2006, to regain compliance with The Nasdaq SmallCap Market's $1.00minimum bid price rule.

The grace period is extendable by another 180 days, to Oct. 2,2006, if SAVVIS meets certain other listing requirements. If thecompany does not regain compliance within the allotted period,Nasdaq will send the company a notice that it is subject to adelisting from Nasdaq, which SAVVIS would be able to appeal to aNasdaq Listing Qualifications Panel.

SAVVIS received the notification because the bid price of SAVVIS'common stock closed below $1.00 per share for 30 consecutivebusiness days. Under NASD Marketplace Rules, $1.00 per share isthe minimum required for continued listing. If, at any timeduring the grace period, the bid price of the company's commonstock closes at $1.00 per share or more for at least tenconsecutive business days, Nasdaq will notify the company that itcomplies with the Rule. SAVVIS has existing stockholderauthorization for both a one-for-fifteen and a one-for-twentyreverse split of its outstanding common stock.

SAVVIS, Inc. (NASDAQ:SVVS) -- http://www.savvis.net/-- is a global IT utility services provider that focuses exclusively on ITsolutions for businesses. With an IT services platform thatextends to 47 countries, SAVVIS has over 5,000 enterprisecustomers and leads the industry in delivering secure, reliable,and scalable hosting, network, and application services. Thesesolutions enable customers to focus on their core business whileSAVVIS ensures the quality of their IT systems and operations.SAVVIS' strategic approach combines virtualization technology, aglobal network and 24 data centers, and automated management andprovisioning systems.

More than doubling the production capacity of Solutia's originalmanufacturing plant, the new facility will support China's rapidlygrowing market for heat transfer fluids. "This facility willenable Solutia to meet the needs of our current and futurecustomers in China by ensuring that production capacity is alignedwith market demand," said Dale Kline, global business director forSpecialty Fluids.

Since 1995, Solutia has become China's leading provider ofproducts and services related to heat transfer fluids. "We areextremely pleased with the reception Therminol has received inChina. This expansion represents a key component of our globalstrategy and our long-term commitment to serve our Chinesecustomers, partners and employees," Kline said.

For its expansion, Solutia selected Suzhou as a location that iswell positioned to meet customers' current and emerging heattransfer fluid product, customer service and technical serviceneeds. "Our ability to provide locally produced products andservices to the same exacting standards as our other worldwidemanufacturing facilities sets Solutia apart," said Sam Yiu,general manager of Solutia Therminol Co. Ltd. "Our expandedproduction capacity will enhance customers' confidence that theyare buying the best high temperature heat transfer fluids in theworld."

Demand for Therminol heat transfer fluids has increased steadilyin China since production started there 10 years ago.Construction on the newly opened facility began in 2003.

Headquartered in St. Louis, Missouri, Solutia, Inc. --http://www.solutia.com/-- with its subsidiaries, make and sell a variety of high-performance chemical-based materials used in abroad range of consumer and industrial applications. The Companyfiled for chapter 11 protection on December 17, 2003 (Bankr.S.D.N.Y. Case No. 03-17949). When the Debtors filed forprotection from their creditors, they listed $2,854,000,000 inassets and $3,223,000,000 in debts. Solutia is represented byRichard M. Cieri, Esq., at Kirkland & Ellis. (Solutia BankruptcyNews, Issue No. 47; Bankruptcy Creditors' Service, Inc.,215/945-7000)

Hurricane Rita has caused raw material and utility supplylimitations, and some of Solutia's suppliers have declared forcemajeure. The hurricane and supply limitations have impactedmanufacturing operations throughout Solutia's Integrated NylonDivision. As a result of the supply limitations, Solutia isallocating available supply of certain products during the forcemajeure period.

Solutia has contacted customers and is actively managing thesituation to mitigate the effects of this interruption in supplyon its operations and customer deliveries. However, the durationof the force majeure period and the potential financial impact ofthis situation on the company are unknown at this time.

In order to alleviate the potential financial impact of thissituation on its liquidity, Solutia will retain a portion of itsnet proceeds from the sale of Astaris LLC, its 50/50 joint venturewith FMC Corporation, rather than using all of these proceeds topartially pay down the term loan portion of its debtor-in-possession financing. As a result, Solutia anticipates it will beable to maintain liquidity consistent with levels experienced thusfar during 2005. Closing of the Astaris sale is subject tovarious conditions and contingencies, including regulatory andBankruptcy Court approval, all of which are expected to besatisfied by mid November.

Headquartered in St. Louis, Missouri, Solutia, Inc. --http://www.solutia.com/-- with its subsidiaries, make and sell a variety of high-performance chemical-based materials used in abroad range of consumer and industrial applications. The Companyfiled for chapter 11 protection on December 17, 2003 (Bankr.S.D.N.Y. Case No. 03-17949). When the Debtors filed forprotection from their creditors, they listed $2,854,000,000 inassets and $3,223,000,000 in debts. Solutia is represented byRichard M. Cieri, Esq., at Kirkland & Ellis.

SOUPER SALAD: Wants to Employ Padgett Stratemann as Auditor-----------------------------------------------------------Souper Salad Inc. asks the U.S. Bankruptcy Court for the Districtof Arizona for permission to employ Padgett, Stratemann & Co.,LLP, as its auditor.

The Debtor wants Padgett Stratemann to provide audit services inconnection with the company's 401(k) Plan. As approved by theCourt, the Debtor was permitted to honor all prepetitionemployee's obligations and continue past practices under theDebtor's 401(k) Plan in order to retain employees and preserveemployee morale.

Padgett Stratemann will be paid $7,500 fee for its services, plusout of pocket expenses. The audit services to be provided by thefirm are appropriate for proper continuation of the Debtor's401(k) Plan.

David R. Waddell, at Marcum & Kleigman, assures the Court that thefirm is "disinterested" as that term is defined in Section 101(14)of the Bankruptcy Code.

Southern Union Company -- http://www.southernunionco.com/-- is engaged primarily in the transportation, storage and distributionof natural gas. Through Panhandle Energy, the Company owns andoperates 100% of Panhandle Eastern Pipe Line Company, TrunklineGas Company, Sea Robin Pipeline Company, Southwest Gas StorageCompany and Trunkline LNG Company - one of North America's largestliquefied natural gas import terminals. Through CCE Holdings,LLC, Southern Union also owns a 50 percent interest in andoperates the CrossCountry Energy pipelines, which include 100percent of Transwestern Pipeline Company and 50 percent of CitrusCorp. Citrus Corp. owns 100 percent of the Florida GasTransmission pipeline system. Southern Union's pipeline interestsoperate approximately 18,000 miles of interstate pipelines thattransport natural gas from the San Juan, Anadarko and PermianBasins, the Rockies, the Gulf of Mexico, Mobile Bay, South Texasand the Panhandle regions of Texas and Oklahoma to major marketsin the Southeast, West, Midwest and Great Lakes region.Through its local distribution companies, Missouri Gas Energy, PGEnergy and New England Gas Company, Southern Union also servesapproximately one million natural gas end-user customers inMissouri, Pennsylvania, Rhode Island and Massachusetts.

SPIEGEL INC: Alvarez & Marsal Wins 'Turnaround of the Year' Award-----------------------------------------------------------------Alvarez & Marsal, a global professional services firm, has beenrecognized by the Turnaround Management Association with the"Large Company Turnaround of the Year" award for its restructuringof Spiegel, Inc. William C. Kosturos, CTP, managing director andco-head of the firm's West region, will be honored at the TMAAnnual Convention, October 18-21, at the Chicago Hilton & Towers.

"We are proud to be recognized by our industry peers for theturnaround of Spiegel, Inc.," said Mr. Kosturos. "The success ofthis restructuring is a testament to the talented team we broughtto the engagement, the value we were able to derive from thebusiness and the strong working relationships we developed withcompany management, the creditors' committee and others who playeda key role in the process."

Founded in 1865 as a home furnishings business, Spiegel expandedinto mail order catalogs and became a pioneer in extending creditto customers. But by early 2003, high customer credit carddefault rates, plummeting sales and costly overhead had created afinancial crisis of enormous scope and complexity. The company,whose merchant operations included Spiegel Catalog, Newport Newsand Eddie Bauer, had breached loan covenants, ceased filingfinancial statements and was under investigation by multiple U.S.government authorities. Alvarez & Marsal was named to lead therestructuring effort, serving as CEO/CRO and other interimmanagement roles.

On March 17, 2003, Spiegel filed for bankruptcy protection afterits credit card trust went into default, triggering an immediateliquidity crisis. A&M began executing a plan that established anew credit card program, reduced overhead, closed underperformingstores, improved merchandising and revamped back-end operations.Spiegel Catalog and Newport News were sold to investor groups anda standalone business was created around Eddie Bauer. Toward theconclusion of the case, the bankruptcy court judge heralded thecase as "almost a perfect poster child of what Chapter 11 isdesigned to be." Not only was the retailer back in the black, butit had also built a substantial cash reserve, enabling the companyto progress through the bankruptcy without utilizing its debtor-in-possession financing.

On the heels of greatly improved comp store sales and earningsperformance, Eddie Bauer Holdings exited bankruptcy in June of2005. Spiegel's unsecured creditors recovered in excess of 90%of claims, receiving 100% of Eddie Bauer Holdings equity and theremainder in cash. Over the course of the case, Spiegel's cashbalance had grown from $35 million to $327 million and whencombined with exit financing and other settlements, the resultingcash payout to creditors was in excess of $730 million.

This marks the second win for Alvarez & Marsal in the "LargeCompany Turnaround" category from the TMA. Alvarez & Marsal wasrecognized for its work on Warnaco in 2003. The criteria toqualify for the "Large Company Turnaround" category is $300million USD or greater. The TMA recognizes industry leaders whoare outstanding examples of how using a unique set of skills inoperations, management, and finance can turn around a company oncethought to be unsalvageable.

Headquartered in Downers Grove, Illinois, Spiegel, Inc. -- http://www.spiegel.com/-- is a leading international general merchandise and specialty retailer that offers apparel, homefurnishings and other merchandise through catalogs, e-commercesites and approximately 560 retail stores. The Company filed forChapter 11 protection on March 17, 2003 (Bankr. S.D.N.Y. Case No.03-11540). James L. Garrity, Jr., Esq., and Marc B. Hankin, Esq.,at Shearman & Sterling, represent the Debtors in theirrestructuring efforts. When the Company filed for protectionfrom its creditors, it listed $1,737,474,862 in assets and$1,706,761,176 in debts. The Court confirmed the Debtors'Modified First Amended Joint Plan of Reorganization on May 23,2005. Impaired creditors overwhelmingly voted to accept the Plan.

The Justice Department official says that the Debtor has notfulfilled its duties as debtor-in-possession. Specifically, theDebtor:

(1) has not filed monthly reports; (2) has not filed a plan of reorganization; and (3) has not paid quarterly fees.

The U.S. Trustee offers the Court an alternative equallyacceptable to her: convert to a chapter 7 liquidation.

Headquartered in Fayetteville, Georgia, Spikes Enterprises is aKentucky Fried Chicken franchisee. The Company filed for chapter11 protection on June 6, 2005 (Bankr. N.D. Ga. Case No. 05-17180).Paul Reece Marr, Esq., represents the Debtor in its restructuringefforts. When the Debtor filed for protection from its creditors,it estimated assets between $1 million to $10 million andestimated debts between $500,000 to $1 million.

STANDARD PACIFIC: Fitch Rates Sr. Unsecured Debt at BB------------------------------------------------------Fitch Ratings initiates ratings on Standard Pacific Corp.(NYSE:SPF). Fitch assigns a 'BB' rating to the senior unsecureddebt. The rating applies to approximately $1.1 billion inoutstanding senior notes and Standard Pacific's revolving creditagreement. A rating of 'B+' has been assigned to the company'soutstanding $150 million senior subordinated notes. The IssuerDefault Rating is 'BB'. The Rating Outlook is Positive.

Ratings for Standard Pacific are based on the company's successfulexecution of its business model, relatively conservative landpolicies, and geographic and product line diversity. The companyhas been an active consolidator in the homebuilding industry,which has contributed to the above-average growth during the pastfour years, but has kept debt levels a bit higher than its peersin recent years. Management has also exhibited an ability toquickly and successfully integrate its acquisitions. In any case,now that the company has reached current scale there may besomewhat less use of acquisitions going forward and acquisitionsmay be smaller relative to Standard Pacific's current size.

The company's EBITDA, EBIT, and FFO to interest ratios tend to besomewhat below the average public homebuilder, as does inventoryturnover. Standard Pacific's leverage is somewhat higher anddebt-to-EBITDA ratio is slightly below the averages of its peers.However, the company's margins are substantially above the averageof other public builders.

Although the company has certainly benefited from the generallystrong housing market of recent years, a degree of profitenhancement is also attributed to purchasing, design, andengineering, access to capital, and other scale economies thathave been captured by the large national and regional publichomebuilders in relation to non-public builders.

These economies, the company's presale operating strategy, and areturn on equity and assets orientation provide the framework tosoften the margin impact of declining market conditions incomparison to previous cycles. Standard Pacific's ratio of salesvalue of backlog to debt during the past few years has rangedbetween 1.6 times (x) to 2.1x and is currently 2.1x - acomfortable cushion.

Standard Pacific employs conservative land and constructionstrategies. The company typically options or purchases land onlyafter necessary entitlements have been obtained so thatdevelopment or construction may begin as market conditionsdictate. The company extensively uses a combination of lotoptions and joint ventures.

The use of nonspecific performance rolling options gives StandardPacific the ability to renegotiate price/terms or void the option,which limits downside risk in market downturns and provides theopportunity to hold land with minimal investment. At present25.4% of its lots are controlled through options and 16.7% arecontrolled in JVs. A high percentage of its homes are pre-sold,especially in California.

Fitch views Standard Pacific's partnerships and JVs to bestrategically and financially material to the company'soperations. However, the manageable leverage levels and thesupply of land in attractive markets held in the partnershipsmitigate this risk to some extent. The company's unconsolidatedhomebuilding and land development JV leverage was 47.0% at the endof second-quarter 2005. Standard Pacific's homebuilding leveragewas 44.9%. Adjusting for off-balance-sheet commitments, StandardPacific's adjusted homebuilding debt to adjusted capital was50.9%.

Standard Pacific has pursued growth opportunities within andadjacent to existing markets. The company has also diversifiedgeographically during the past few years by expanding into some ofthe largest homebuilding markets in the United States. Since1998, it has expanded through acquisition into Arizona, Colorado,Florida, and the Carolinas. Each of the acquisitions includedsubstantial strategic lot inventories as well as experiencedmanagement teams. As a result of these acquisitions, StandardPacific's non-California divisions represented over 60% of homesdelivered in 2004, compared to just over 20% of deliveries in1997.

Standard Pacific renewed its revolving line of credit on Aug. 31,2005. The term was extended four years to Aug. 31, 2009; thefacility increased from $600 million to $925 million. Thefacility includes an accordion feature allowing the company toincrease the commitment to $1.1 billion. As of June 30, 2005, thecompany had $150 million in debt outstanding on its revolvingcredit facility and $65.4 million in letters of creditoutstanding. As of second-quarter end, Standard Pacific had $7.1million in cash and equivalents and $384.6 million available underthe $600 million revolving credit facility, adjusting for lettersof credit.

The company has purchased modest to moderate amounts of stock inthe past and has repurchased $6.9 million of common stock so farin 2005. As of June 30, 2005, $44.3 million was authorized forfuture share repurchase.

Current spot prices of approximately $2.00 per gallon are about40% higher than this time last year. As a result, already highlevels of customer attrition, price-induced conservation, andmargin compression could worsen.

Fitch is also concerned with the adequacy of Star Gas' liquidityprovided under its $260 million secured revolving credit facilityto manage its supply and collateral requirements. Highercommodity prices increase working capital needs and heighten thelikelihood that the company will draw from the remaining proceedsfrom the sale of its propane operations to buy heating oil and notapply the cash proceeds to debt reduction. Based on the company'sJune 30, 2005 Form 10Q, $93.2 million remained available torepurchase Star Gas senior notes.

The company has disclosed it is evaluating its near-term andshort-term liquidity position with external financial advisers.Fitch is not cognizant of any specific findings or recommendationsbased on these evaluations nor the implications to creditors.Fitch will continue to monitor operating and financial results asthey are disclosed by the company. A continuation of currentoperating trends could lead to further negative rating actions.

Proceeds from the proposed offerings, combined with $315 millionof expected equity contributions from Targa's private equitysponsor, will be used primarily to fund the acquisition of DynegyMidstream Services, Limited Partnership from Dynegy, Inc. for$2.35 billion. The acquisition is expected to close at the end ofOctober 2005 (all comments below pertain to Targa pro forma forthe DMS transaction). The rating outlook is stable.

The ratings are restrained by:

1) very high leverage;

2) the company's limited operating history;

3) the integration risks associated with the DMS transaction, which is a significant transformation for the company;

4) risks associated with the natural gas gathering and processing business in general including risks associated with commodity price changes, volume declines in areas where the company operates, and competition from other companies in the business, several of which have significant financial resources;

5) concerns about the damage inflicted by recent hurricanes on the company's assets and potentially medium- and long-term financial performance despite what appears to be adequate insurance; and

6) execution risk associated with the company's proposed sale of the North Texas assets.

The ratings are supported by:

1) the company's size and scale, which makes it one of the largest integrated companies in the midstream sector;

2) expected de-leveraging over the near-term based on the proposed sale of the North Texas assets;

3) expected de-leveraging over the medium-term based on free cash flow which is supported by the company's contract profile and hedging positions that help mitigate the risks of potential changes in commodity prices, in addition to relatively low levels of maintenance capital expenditures;

4) the company's seasoned management team which has a successful track record in the midstream sector; and

5) the company's position in attractive areas of oil and gas production where drilling activity is active.

The stable outlook reflects Moody's expectation of a successfulintegration of the DMS acquisition and execution of the company'splans to sell the North Texas assets for net proceeds of at least$700 million. Should Targa be unable to or, for any reason,decide not to sell the North Texas assets by June 30, 2006, theratings will likely be lowered. Also, financial performance belowexpectations or other distrations that prevent the company fromreducing Debt/Adjusted EBITDA to less than 5.0x by the end of 2006could have negative rating implications. Conversely, financialperformance above expectations combined with the achievement ofthe company's de-leveraging plans could have positive ratingsimplications.

Targa was formed in 2004 and began substantive operations with anacquisition of midstream natural gas assets from ConocoPhillips inApril 2004. With the acquisition of DMS, Targa will become alarge-scale, integrated midstream energy company with:

The Natural Gas Gathering and Processing division consists of thecompany's gathering systems and processing plants and constitutesapproximately 70-75% of the company's total gross margin. The NGLLogistics and Marketing division consists of the company's naturalgas fractionation, storage and terminalling, refinery services,wholesale propane marketing, and NGL distribution and marketingbusinesses and constitutes the remaining 25-30% of the company'stotal gross margin.

A significant part of Targa's post-closing de-leveraging plandepends on the sale of the North Texas assets. The North Texasassets consist of two wholly owned natural gas processing plants(Chico and Shackelford) and an associated gathering system locatedin the Fort Worth Basin. Even though these assets areattractively positioned, the company does not have otherinfrastructure in the area and believes that the assets' growthpotential would offer significant value to third parties andtherefore command a high multiple.

Targa expects that the sale of these assets will generate proceedsabove those required to repay the $700 million asset sale bridgeloan facility. The terms of the senior secured credit facilitiesrequire that 100% of the first $700 million of sale proceeds beused to pay off the asset sale bridge loan facility. After that,50% of sales proceeds between $700 million and $850 million and25% above $850 million will be required to repay the term loanfacility. Sales proceeds not required to be used for mandatoryrepayment will be available as an permitted distribution to equityholders. Given the high likelihood of a sale in light of theattractive nature of the assets, Moody's factored in the sale ofthe assets and associated debt repayment in arriving at Targa'sBa3 corporate family rating.

Several of DMS' facilities were severely damaged as a result ofthe recent hurricanes. Three of DMS' facilities in the regionwere damaged as a result of Hurricane Katrina including:

* the Yscloskey processing plant (ownership interest, 25.6%);

* the VESCO complex (ownership interest, 22.9%); and

* the non-operated Toca processing plant (ownership interest, 11.6%).

Based on the latest information available, it will likely beseveral months before the plants return to service. Preliminaryassessments of the effects of Hurricane Rita indicate someflooding and wind damage to DMS' Barracuda and Stingray processingplants (all wholly owned) in southern Louisiana and potentially toDMS' gathering systems in the Gulf of Mexico. Dynegy carriesbusiness interruption insurance that will transfer to Targa uponclosing of the transaction. Dynegy will retain the deductiblewith respect to business interruption insurance which consists ofa waiting period of 30 days for onshore facilities.

Even though Targa will have what appears to be adequate insurancecoverage, Moody's has some concerns about the potentially medium-and long-term effects of the hurricane damage as some of the inletvolumes lost may never be restored or may potentially be divertedelsewhere if repairs at the facilities take a long time. However,Moody's observes that the income generated by the facilities (on anet basis) relative to the overall company is modest and that thenegative effects from the hurricanes, at least in the near-term,have led to a higher commodity price environment which isbenefiting the company elsewhere.

DMS has several significant commercial contracts with Chevron, itslargest customer. On the gathering and processing side of thebusiness, Chevron has dedicated substantially all of its naturalgas production, on a life-of-field basis, in the Permian Basin andGulf of Mexico to DMS (these volumes constitute approximately 25-30% of DMS' natural gas gathered for processing). In September2006, each party has the right to renegotiate the pricingprovisions of these contracts if they no longer reflect currentmarket conditions. Accordingly, there is a risk of potentialmargin erosion if the pricing provisions in these contracts arerevised downward. While this is a risk, Moody's notes that thecompany receives the benefit of having a meaningful portion of itsbusiness coming from dedicated areas and that pricing provisionsare renegotiated at market rates.

In addition to DMS' contracts with Chevron for gathering andprocessing, DMS also has contracts with Chevron to providerefinery services (NGL logistics, feedstock supply, and marketingactivities) for several refineries and a contract to sell NGLs toChevron Phillips Chemical (CPC). The refinery services contractsmay be terminated or re-negotiated in September 2006 and yearlythereafter and the contracts with CPC may be terminated inSeptember 2008 and yearly thereafter with two years' advancenotice. Given the established relationships that DMS has withChevron (also considering that most, if not all, of the employeesproviding these services currently will become Targa employees asa result of the acquisition) and the difficulties associated withswitching to other service providers, it is unlikely thesecontracts will be terminated.

Like all midstream natural gas companies, Targa's financialperformance can be expected to fluctuate with commodity prices.Price cycles account for much of the industry's relatively poorperformance in 2002 as well as the significant upswing in recentperiods. These cycles can be fleeting and hard to predict overeven short periods. Although Targa's performance is affected bythe prices of natural gas, NGLs, and the spreads between them, itscontract profile and hedging program help to reduce volatility.

Pro forma for the DMS acquisition and the sale of the North Texasassets, approximately 50-55% of the company's total gross marginand 80% of the company's gathering and processing gross margin ispriced under percentage-of-proceeds contracts. The margin earnedunder these contracts fluctuates with the prices of natural gasand NGLs. In order to protect its margin under such contracts,Targa has hedged approximately 70-85% of its equity natural gasand NGL volumes through 2009 (excluding volumes associated withthe North Texas assets). Previously, hedging NGL price exposurerequired the use of "dirty" or "proxy" hedges using crude oilcontracts based on the correlations between the prices of crudeoil and NGLs; however, Targa has arranged to hedge the specificcomponents of its NGL production which provides better priceprotection.

Approximately 5-6% of the company's gathering and processing grossmargin comes from keep-whole contracts, which expose the companyto the risk of negative frac spreads (the spread between naturalgas and NGLs) which it is largely able to mitigate by bypassingprocessing. Another 8-10% of the company's gathering andprocessing gross margin comes from hybrid contracts that operatelike a percent-of-liquids contract in times of favorableprocessing economics and a fee-based contract in times ofunfavorable processing economics. The rest of the company'sgathering and processing gross margin comes from fee-basedcontracts that involve little or no commodity price risk.

Aside from its gathering and processing business, the company'sNGL logistics and marketing business varies with commodity pricesas many of those contracts price based on margin and also volumesare affected by the amount of gas processed which is dependent onfrac spreads. Thus, as frac spreads tighten or turn negative,Targa's straddle plants and other plants owned by third partiesprocess less gas, reducing volumes feeding into its fractionationfacilities and also reduce the volumes available for marketing.

Overall, Moody's believes that the company's exposure to commodityprices is manageable. The company's contract profile and hedgingpositions improve predictability and provides for a tighter rangeof expected financial performance.

Pro forma for the DMS acquisition and the sale of the North Texasassets, Targa's Adjusted EBITDA was approximately $281 million forthe LTM period ended June 30, 2005. Relative to pro forma debt of$1.5 billion (which assumes the asset sale bridge loan facility ispaid off), Targa's Debt/Adjusted EBITDA was approximately 5.3x,which is elevated for the company's rating category. Pro formaassuming the sale of the North Texas assets does not occur,Debt/Adjusted EBITDA was approximately 6.3x for the same period,which is out of range for the company's rating category.

Looking ahead to 2006, Moody's expects that Targa will generatepro forma Adjusted EBITDA (excluding the North Texas assets) inthe $300 million to $325 million range, assuming supportivecommodity prices and a positive frac spread, which shouldtranslate into Debt/Adjusted EBITDA in the 4.5x-5.0x range by theend of 2006 which is somewhat elevated relative to Ba3-ratedpeers. Our expectations for Targa's Debt/Adjusted EBITDA on alonger term basis is in the 4.0x-4.5x range.

Targa's Adjusted EBITDA/Interest, pro forma for the DMSacquisition and the sale of the North Texas assets, wasapproximately 2.5x for the LTM period ended June 30, 2005 and isexpected be in the 2.5x to 3.0x range next year, which is somewhatlow for the company's rating category. As of June 30, 2005,Targa's Debt/Book Capitalization was approximately 77% on a proforma basis (assuming the sale of the North Texas assets for $700million), which is on the high end for Ba-rated peers.

At closing, which is prior to the planned sale of the North Texasassets, Targa's pro forma Debt/Book Capitalization is expected tobe approximately 83% (excluding any unrealized losses recognizedin earnings or through accumulated OCI associated with the hedgesput in place in connection with the DMS acquisition), whichreflects the fact that approximately 87% of the purchase price ofthe DMS acquisition is being financed with debt.

The senior secured credit facilities are not notched up from thecorporate family rating because they constitute the preponderanceof the company's debt structure. The senior unsecured notes aredouble-notched down from the corporate family rating to reflectMoody's expectations of a much lower recovery in the event ofdefault. Including the entire $250 million revolving creditfacility (currently expected to be undrawn at closing) butexcluding the $300 million synthetic letter of credit facility,Targa's secured debt is expected to be approximately $2.1 billion(86% of total debt) prior to the sale of the North Texas sale and$1.4 billion (80% of total debt) after the sale.

There is no structural subordination currently as there is no debtoutstanding at any of Targa's operating subsidiaries. Both thenotes and the senior secured credit facilities are guaranteed byTarga's material operating subsidiaries with the exception ofVersado Gas Processors, L.L.C. (ownership interest, 63%) and CedarBayou Fractionators, L.P. (ownership interest, 88%).

The ratings are subject to Moody's review of final documentation.

In summary, these ratings have been assigned to Targa with astable outlook:

Judge Hoffman determined that the Plan met the 13 standards forconfirmation required under Section 1129(a) of the BankruptcyCode.

About the Plan

The Amended Joint Plan consists of five components.

The first component provides Techneglas with the option of:

a) creating a single Post Confirmation Entity for liquidating through prosecution, settlement or other disposition, Claims, Causes of Action, receivables, rights to payment of Techneglas, and other non-real estate assets; or

The second component provides for the establishment of NEGDistribution NewCo, which will be created in the discretion ofTechneglas as an ongoing business, wholly owned by NEG, created onthe Effective Date that will:

a) receive the Distribution Assets, and

b) except as otherwise provided in the Plan, receive all of the assets that remain in the Reorganized Techneglas or Post Confirmation Entity, including any residual assets from the Real Estate Entity, following distributions to Techneglas Non-NEG Creditors; provided, however, in the event that there are no assets that are Distribution Assets, all assets that would otherwise be distributed to NEG Distribution NewCo will be distributed to NEG.

The third component is the creation of a Real Estate Entity, towhich Techneglas will transfer, for use and disposition, realestate assets that have not been sold as of the Effective Date andthat may potentially be subject to environmental liability andcertain other assets sufficient to manage that real estate pendingits sale.

The fourth and fifth components are the continuation of thebusinesses of NEG Ohio and NEG America, as Reorganized NEG Ohioand Reorganized NEG America, which will fund distributions toall NEG Ohio Creditors and NEG America Creditors, respectively.

Treatment of Claims and Interests for Techneglas Inc.

Secured Claims, Other Priority Claims and Union Priority Claimswill be paid in full after the Effective Date. PBGC Claims willbe paid after the Effective Date, a distribution of Cash amountingto 100% of $34,530,000 minus any amounts received by the PBCG orcontributed to the Hourly Plan pursuant to any Court order enteredprior to the Distribution Date.

Other Unsecured Claims will be paid:

1) 63.5% of the amount of their Allowed Claims; plus

2) 3.5% of the Allowed Claim, if the Plan is confirmed prior to Sept. 15, 2005, or if there is a Court order entered prior to Sept. 15, 2005, in the Techneglas chapter 11 case that has not been stayed, authorizing the contribution of $17 million into the Hourly Plan or the payment of that amount to the PBGC; plus

3) if the total amount of Other Unsecured Claim Allowed Claims is less than $23,630,000; the difference between $23,630,000 and the total amount of Other Unsecured Claim Allowed Claims, multiplied by the percentage of the dollar amount of Other Unsecured Allowed Claims held by Third Party Claimants, multiplied by 63.5% if the condition of subparagraph (2) has not been satisfied, and 67% if that condition has been satisfied.

As reported in the Troubled Company Reporter on Sept. 8, 2005, theCommittee and Locke Liddell have agreed that the Firm will receive90% of its normal hourly rates, adjusted from time to time, asapproved by the Court. Doug Skierski, Esq., a Locke Liddellassociate, discloses that he charges $300 per hour for hisservices.

Court documents do not disclose the current hourly rates for otherprofessionals.

(e) rights under non-disclosure, non-compete, confidentiality or non-solicitation agreements, and Debtors' rights under warranties and other documents from third-party sellers or providers of services;

(f) documents and permits; and

(g) all rights, claims, and causes of action against third parties relating to any of the assets.

As reported in the Troubled Company Reporter on Sept. 9, 2005, BKRCornwell will prepare and file the Debtors' corporate tax returnsfor tax year 2004.

The Debtors tell the Court that BKR Cornwell will be paid $8,950for its services. The Debtor discloses that $4,500 was paidprior to the commencement of services and $4,450 will be payableafter the completion of the tax services.

TITAN CRUISE: Cascade Capital Approved as Financial Advisors------------------------------------------------------------The U.S. Bankruptcy Court for the Middle District of Florida gaveTitan Cruise Lines and its debtor-affiliate permission to employCascade Capital Group as their financial advisors and investmentbankers.

Cascade Capital will assist the Debtors in evaluating theirbusiness operations and in considering asset dispositions, and innegotiating and proposing a plan of reorganization. If a sale ofthe Debtors' assets is necessary, Cascade Capital will assist themwith the due diligence process and participate in negotiations forthat proposed sale.

Cascade Capital will also provide all other financial advisory andinvestment banking services to the Debtors that are appropriateand necessary in their chapter 11 cases.

Mark Calvert, C.P.A., a Managing Director of Cascade Capital,disclosed that his Firm received a $60,000 retainer.

Mr. Calvert reports that Cascade Capital will be paid with:

1) a Monthly Fee of $10,000 per month;

2) a Success Fee equal to:

a) 1% of Enterprise Value, which is the projected EBITDA over a 5-year period with a terminal value based upon a growth rate the same as the first five years, and to be paid only if the Debtors become operationally successful or they sustain break even for a period of not less than three consecutive months;

b) 3% of the Enterprise Value if the Debtors are successfully reorganized through a chapter 11 plan; and

3) 2% of the Purchase Price if the Debtors are sold or merged.

Cascade Capital does not represent any interest materially adverseto the Debtors or their estates.

Headquartered in Saint Petersburg, Florida, Titan Cruise Lines andits subsidiary owns and operates an offshore casino gamingoperation. The Company and its subsidiary filed for chapter 11protection on August 1, 2005 (Bankr. M.D. Fla. Case Nos. 05-15154and 05-15188). Gregory M. McCoskey, Esq., at Glenn Rasmussen &Fogarty, P.A., represents the Debtors in their restructuringefforts. When the Debtors filed for protection from theircreditors, they estimated assets and debts between $10 million to$50 million.

TITAN CRUISE: Wants Open Ended Deadline to Decide on Leases----------------------------------------------------------- Titan Cruise Lines and its debtor-affiliate ask the U.S.Bankruptcy Court for the Middle District of Florida for anextension, until the confirmation date of a plan ofreorganization, the period within which they can elect to assume,assume and assign, or reject their unexpired nonresidential realproperty leases.

The Debtors believe that they do not have significant leasessubject to Section 365(d)(4) of the Bankruptcy Code but they arefiling a request to extend their lease decision period out of anabundance of caution on their part.

The Debtors relate that they do not have the funds to incur largeadministrative expenses and they do not wish to assume any leasesor create large administrative claims until the time they have thefunds available to develop a concrete plan of reorganization.

The requested extension is in the best interest of their estatesand their creditors and other parties-in-interest.

The Court will convene a heating at 9:00 a.m., on Oct. 18, 2005,to consider the Debtor's request.

Headquartered in Saint Petersburg, Florida, Titan Cruise Lines andits subsidiary owns and operates an offshore casino gamingoperation. The Company and its subsidiary filed for chapter 11protection on August 1, 2005 (Bankr. M.D. Fla. Case Nos. 05-15154and 05-15188). Gregory M. McCoskey, Esq., at Glenn Rasmussen &Fogarty, P.A., represents the Debtors in their restructuringefforts. When the Debtors filed for protection from theircreditors, they estimated assets and debts between $10 million to$50 million.

TRUST ADVISORS: Wants to Hire Shipman & Goodwin as Bankr. Counsel----------------------------------------------------------------- Trust Advisors Stable Value Plus Fund asks the U.S. BankruptcyCourt for the District of Connecticut for permission to employShipman & Goodwin LLP as its general bankruptcy counsel.

Shipman & Goodwin will:

1) advise the Debtor of its rights, powers and duties as a Debtor and debtor-in-possession in the continued management and operation of its business and property, including the management and control of funds in the trust;

2) advise and assist the Debtor in the negotiation and documentation of debt restructuring and its related transactions;

3) advise the Debtor concerning the actions that it might to collect and recover property for the benefit of its estates;

5) counsel the Debtor in connection with the formulation, negotiation and promulgation of a plan of reorganization and its related documents; and

6) perform all other legal services to the Debtor that are necessary or appropriate in the administration of its chapter 11 case.

Ira H. Goldman, Esq., a Partner of Shipman & Goodwin, is one ofthe lead attorneys for the Debtor.

Shipman & Goodwin intends to apply with the Court for compensationfor services rendered and reimbursement of expenses incurred post-petition in accordance with the applicable provisions of theBankruptcy Code, the Bankruptcy Rules and the Local Rules ofBankruptcy Procedures.

Shipman & Goodwin had not yet submitted its retainer amount andhourly rate of its professionals to the Debtor when the Debtorfiled its request with the Court to employ the Firm as its generalbankruptcy counsel.

Shipman & Goodwin assures the Court that it does not represent anyinterest materially adverse to the Debtor or its estate.

Headquartered in Darien, Connecticut, Trust Advisors Stable ValuePlus Fund is a collective trust for employee benefit planinvestors and was created to serve as an investment vehicle forvarious types of pension plans qualified under Section 401(a)ofthe Internal Revenue Code. The Company filed for chapter 11protection on Sept. 30, 2005 (Bankr. D. Conn. Case No. 05-51353).When the Debtor filed for protection from its creditors, it listedestimated assets and debts of more than $100 million.

TRUST ADVISORS: Taps Murray L. Becker as Financial Advisor---------------------------------------------------------- Trust Advisors Stable Value Plus Fund asks the U.S. BankruptcyCourt for the District of Connecticut for permission to employMurray L. Becker, a Fellow of the Society of Actuaries (FSA) asits financial advisor and consultant.

Mr. Becker will:

1) evaluate the Debtor's current investment policy and action plan for restoring the Debtor's Plus Fund's assets to book value, including underlying support to determine the reasonableness of the assumptions used to develop the action plan;

2) assist the Debtor with the formulation of a plan of reorganization and any alternatives that may be developed;

3) render expert testimony, as requested by the Debtor from time to time, regarding stable value investment issues, the feasibility of a plan of reorganization and other related matters;

4) assist the Debtor in complying with the reporting requirements of the Office of the U.S. Trustee; and

5) perform all other financial advisory and consulting services as requested by the Debtor from time to time.

Mr. Becker disclosed that he charges $400 per hour for hisservices and his advisory and consulting fee is $10,000.

Mr. Becker assures the Court that he does not represent anyinterest materially adverse to the Debtor or its estate

UAL CORP: Court Grants Open-Ended Deadline to Decide on Leases--------------------------------------------------------------The Hon. Eugene Wedoff extends the period within which UALCorporation and its debtor-affiliates may assume or rejectunexpired leases through the date wherein a Plan of Reorganizationis confirmed.

By Oct. 21, 2005, the Debtors will file a request to assumethese unexpired leases:

The Debtors also have until Oct. 21, 2005, to file a request toreject their unexpired lease for Terminal and Cargo Space with theSouthwest Florida International Airport.

The Debtors' request to assume and reject the unexpired leaseswill be heard by Nov. 18, 2005.

The Debtors agree to conditionally assume any Municipal BondLease relating to the adversary proceeding they commenced againstthe City and County of Denver, Colorado, and the CaliforniaStatewide Communities Development Authority Special FacilitiesLease Bonds with respect to the San Francisco Municipal Bonds.The order does not prejudice any rights or claims of partiesinvolved in the Municipal Bond Litigation.

UAL CORP: Says Wells Fargo Prevents Sr. Tranche Notes' Purchase---------------------------------------------------------------On July 28, 2005, UAL Corporation and its debtor-affiliatespurchased the Junior Tranches of the 1997-1 EETC fromKreditanstalt fur Wiederaufbau. Completion of the transactiongave the Debtors the right to purchase the Senior Tranche with 10days' written notice.

In August 2005, the Debtors notified Wells Fargo Bank -- asTrustee of the Pass Through Trust Agreement -- that they intendedto purchase the Senior Tranche. To consummate the purchase, theDebtors stood ready to deposit the purchase price into an accountdesignated by Wells Fargo. Judge Wedoff authorized the Debtorsto purchase the Senior Tranche on August 8, 2005.

James H.M. Sprayregen, Esq., at Kirkland & Ellis, in Chicago,Illinois, relates that although the Debtors were ready to pay thepurchase price, Wells Fargo prevented consummation of thetransaction. Specifically, Wells Fargo refused to designate anaccount into which the Debtors could deposit their payment.

Wells Fargo argued that the Debtors' proposed purchase price wasinsufficient. Wells Fargo claimed that the Debtors used anincorrect interest rate to calculate the purchase price andrelated interest. Wells Fargo alleged that a New York statutoryjudgment rate of 9% should apply, rather than the applicableSenior Tranche interest rate of LIBOR plus 22 basis points. Mr.Sprayregen notes that the interest rate discrepancy would inflatethe purchase price by around $65,000,000.

Against this backdrop, the Debtors ask the Court to:

(1) declare that, as rightful owner of all Junior Tranches in the 1997-1 EETC Transaction, they have the right to purchase the Senior Tranche, and that the purchase price, calculated in accordance with the Transactional Documents, is $292,225,804. They ask the Court to declare that Wells Fargo, as Trustee, is obligated to provide an account for the Debtors to deposit the purchase price, and that each Senior Tranche Holder, by its acceptance of the purchase price, agrees to sell the Debtors their Senior Tranche Certificates. The Debtors should also be declared rightful owner of the Senior Tranche Certificates upon acceptance of the purchase Price.

(2) order specific performance of the Pass Through Trust Agreement to effectuate the Debtors' purchase of the Senior Tranche. The Debtors ask the Court to direct Wells Fargo to designate an account in which to deposit the purchase price. Wells Fargo should be compelled to treat the Debtors as the sole owner of the Senior Tranche Certificates.

(3) compel turnover of property of the Debtors' estate. Specifically, the Debtors ask the Court to order Wells Fargo to deliver the right, title and interest of each Senior Tranche Certificate.

(4) issue a mandatory injunction ordering Wells Fargo to designate an account for the Debtors to deposit the purchase price. Wells Fargo should treat the Debtors as the sole owner of the Senior Tranche and comply with its obligations pursuant to the buyout procedure of the Pass Through Trust Agreement.

Wells Fargo Wants Complaint Dismissed

Wells Fargo Bank serves as Pass Through Trustee for the Class ACertificates, Class B Certificates, Class C Certificates andClass D Certificates. The Pass Through Trust Agreement wasentered into in December of 1997 as part of the 1997-1 EnhancedEquipment Trust Certificates, to finance 14 aircraft.

According to Franklin H. Top, III, Esq., at Chapman and Cutler,in Chicago, Illinois, an Intercreditor Agreement governs therights of each Class of Certificates and details the paymentwaterfall under different scenarios. As per the IntercreditorAgreement, a "Triggering Event" occurred when the Debtors filedfor bankruptcy. The Triggering Event required the Debtors tofirst pay amounts outstanding to the Liquidity Provider, then paythe Trusts, which would pass the payments to the holders of theClass A, Class B, Class C and Class D Certificates, in thatorder.

Mr. Top recounts that at all relevant times, the Debtors haveheld the Class D Certificates. On July 28, 2005, the Debtorspurport to have purchased the Class B and Class C Certificates.On August 2, 2005, the Debtors sent a Purchase Notice to WellsFargo alleging the right to purchase the Class A Certificates.The Debtors accuse Wells Fargo of preventing completion of thetransaction. Mr. Top finds it ironic that the Debtors, afterdefaulting on the Equipment Notes and Indentures, want to enforcea provision of the transactional documents.

* The Pass Through Trust Agreement contains a No Action Provision, which limits costly and expensive litigation and ensures that security holders are treated in accordance with their ratable interest in the Trust.

* The Debtors are required to advise Wells Fargo of the alleged defaults under the Pass Through Trust Agreement and ask Wells Fargo to bring an action against the Class A Pass Through Trust. The Debtors may only bring an action if Wells Fargo refuses to do so on their behalf within 60 days.

* The Debtors failed to purchase the Class A Certificates in compliance with the Pass Through Trust Agreement. The Debtors were required to purchase the Class A Certificates while simultaneously purchasing the Class B and Class C Certificates. Mr. Top speculates that the Debtors "overpaid for the B and C Certificates and are now trying to shortchange the holders of the Class A Certificates."

The Debtors' failure to make these purchases simultaneously isfatal to the ability to purchase the Class A Certificates, Mr.Top asserts. The Debtors' bankruptcy filing initiated aTriggering Event, which required payments on Class A Certificatesprior to payments on subordinate Certificates. The Debtors'purchase of the Class B and Class C certificates representspayments in violation of the distributive scheme of the Trust.

Mr. Top points out that the simultaneous purchase requirementreflects the intent of the Trust. Wells Fargo need not surrenderthe Class A Certificates if the purchaser does not comply withthe Pass Through Trust Agreement. Since the Debtors did notcomply with the simultaneous purchase provision, the Class BCertificateholders' option to purchase the Class A Certificateshas expired. The Court cannot order the Class ACertificateholders to turn over their notes.

The Debtors have eliminated more than 25,000 claims, reducing theface amount on the claims register to approximately$45,000,000,000. The Debtors continue to resolve outstandingclaims to maximize distributions and to minimize the reserve fordisputed claims.

URPBPA Responds

Frank Cummings, Esq., at LeBoeuf, Lamb, Greene & MacRae, inWashington, D.C., asserts that the Pension Benefit GuarantyCorporation is violating the allocation scheme and recovery ratioof the Employee Retirement Income Security Act by assigning 45%of its claims against the Debtors back to the Debtors.

Members of the United Retired Pilots Benefit ProtectionAssociation are entitled to assert a claim against the Debtorsfor the PBGC's 45% reassignment, Mr. Cummings explains.

Debtors' Stand on the PBGC Claim

James J. Mazza, Jr., Esq., at Kirkland & Ellis, in Chicago,Illinois, notes that the Pension Benefit Guaranty Corporationwants an extra month to litigate the unfunded liability claim.However, the Debtors' proposed four-month allocation is "morethan adequate time to resolve the issue prior to confirmation."

Under the proposed schedule, Mr. Mazza notes that the Debtorswill not have to hold back a disproportionate and unnecessaryamount of distributions in a disputed claim reserve, which couldimpact the trading price of the Debtors' securities. Althoughthere are no objections to the PBGC claim yet, the OfficialCommittee of Unsecured Creditors has been conducting analysis andhas retained an expert to provide valuation assistance. Theactuarial calculation of PBGC's claim may be complex. However,the proper discount rate has been litigated in several previousbankruptcy cases.

Mr. Mazza maintains that the Court's determination of the PBGCClaim before exit will provide parties with some certaintyregarding a disputed claim reserve, even if an appeal is filed.The scheduling of a trial on PBGC's claim at or beforeconfirmation increases the chances for a consensual resolution.

Any party that does not object to allowance of the PBGC Claim by the PBGC Claim Objection Deadline will be deemed to have forever waived any alleged right to object to the allowance of the Claim. If no objections are filed with respect to the PBGC Claim prior to the PBGC Claim Objection Deadline, then the PBGC Claim will be allowed, and any purported third-party reservation to object to the allowance will be extinguished.

(2) The 9/11 Claims:

Date Event ---- ----- October 7, 2005 9/11 Claims Objection Deadline

October 28, 2005 Reply deadline for 9/11 Claimants to support 9/11 Claims

November 18, 2005 9/11 Claims pretrial conference

Any objection to 9/11 Claims should contain any legal arguments that 9/11 Claims may not be asserted against the Debtors' estates as a matter of law. Any replies in support of 9/11 Claims should include any legal argument opposing the position.

"All dates set forth in this Order are tentative and subject tochange," Judge Wedoff states.

USG CORP: Equity Panel Gets Court Nod to Hire Houlihan Lokey------------------------------------------------------------The U.S. Bankruptcy Court for the District of Delaware authorizesthe Statutory Committee of Equity Security Holders appointed inUSG Corporation and its debtor-affiliates' chapter 11 cases toemploy Houlihan Lokey Howard & Zukin Capital as its financialadvisor, nunc pro tunc to May 18, 2005. Judge Fitzgerald rulesthat the Retention Order will be reviewed monthly to determinewhether the Equity Committee still require a financial advisor'sservice and to assess what benefits are provided to the EquityCommittee.

* $250,000 plus the Transaction Fee in the case of a consensual transaction;

* the lesser of $4.5 million and the sum of 0.15% times "Equity Holder Recoveries", minus 50% times the first nine installments of monthly fees plus 100% times all monthly fees in the case of a Litigation Result Transaction;

* $1 million, if a Legislative Result Transaction occurs within one year of the Agreement's effective date;

* $1.5 million, if the transaction date occurs one year but within 18 months of the Agreement's effectivity;

* $2 million, if the transaction date occurs beyond 18 months but within two years of the Agreement's effective date; and

* a Transaction Fee payable on a Litigation Result Transaction, if the transaction date occurs beyond two years of the Agreement's effectivity.

Headquartered in Chicago, Illinois, USG Corporation --http://www.usg.com/-- through its subsidiaries, is a leading manufacturer and distributor of building materials producing awide range of products for use in new residential, newnonresidential and repair and remodel construction, as well asproducts used in certain industrial processes. The Company filedfor chapter 11 protection on June 25, 2001 (Bankr. Del. Case No.01-02094). David G. Heiman, Esq., and Paul E. Harner, Esq., atJones Day represent the Debtors in their restructuring efforts.When the Debtors filed for protection from their creditors, theylisted $3,252,000,000 in assets and $2,739,000,000 in debts. (USGBankruptcy News, Issue No. 97; Bankruptcy Creditors' Service,Inc., 215/945-7000)

VARIG S.A.: Brazilian Court Refers GCAS Dispute to U.S. Court-------------------------------------------------------------The Hon. Robert Drain of the U.S. Bankruptcy Court for theSouthern District of New York, at the request of Vicente Cervo andEduardo Zerwes, the Foreign Representatives appointed in thereorganization proceedings of VARIG S.A. and its debtor-affiliates, directs GE Commercial Aviation Services, LLC, andJPMorgan Chase Bank to show cause before the U.S. Court in NewYork, on Oct., 2005, why an order should not be issued compellingthem to deliver certain property of the Foreign Debtors' estate,or the proceeds of the property, to the Foreign Representatives.

As reported in the Troubled Company Reporter, Mr. Cervo and Mr.Zerwes alleged that GE Commercial wrongfully instructed JPMorganChase Bank, N.A., to distribute funds out of the Foreign Debtors'JPMorgan account as accelerated payment of a prepetition debt.

GE Commercial had served a notice on JPMorgan declaring a default-- as a result of the Foreign Debtors' bankruptcy in Brazil andthe Section 304 Proceedings. In accordance with the instructionsin the Default Notice, yet without notice to the Foreign Debtors,JPMorgan wired $5,076,961 to GE Commercial. The total amountdisbursed by JPMorgan constituted the proceeds of the ForeignDebtors' accounts receivable

GECAS Defends Case

The Foreign Debtors' submitted their request before the 8thCorporate Court of the District of Rio de Janeiro following JudgeDrains' denial.

Joao Luiz Aguiar de Medeiros and Luiz Fernando Valente de Paiva,counsel to GECAS in Rio Janeiro, tell the Brazilian Court thatVARIG omitted a relevant fact. The debt VARIG assumed wasalready due when they entered into a settlement agreement withthe Lessors. The Lessors only agreed to grant a new time limitto pay it off and to pardon part of the debt if VARIG compliedwith certain obligations and if they abstained from committingcertain acts -- it being certain that any failure to comply withthe obligations would make the debt immediately and fully due andpayable.

Mr. Aguiar argues that GECAS and the Lessors' exercise of theircontractual rights does not violate any material Brazilian law orinfringe any procedure rules and principles of the Code of CivilProcedure or the New Bankruptcy Law of Brazil.

Mr. Aguiar explains that under the Settlement Agreement, theLessors agreed to reschedule the debt in monthly paymentsbeginning in March 2004 and terminating in December 2009. If andonly if there were no occurrence of an event of default and VARIGand Rio Sul paid $83,000,000 of the total debt within a certaintime, the Lessors would pardon the remaining $38,471,000.

Mr. Aguiar notes that VARIG granted the Lessors a real guaranteefor a portion of the debt, a guarantee that is constituted andgoverned by the laws of New York. The guarantee includes a bankaccount held by VARIG with JPMorgan Chase Bank.

Mr. Aguiar also points out that VARIG notified the InternationalAir Transport Association of the terms of the SettlementAgreement and a related Security Agreement that VARIG granted theLessors and GECAS, all rights to withhold, in an event ofdefault, payments owed by IATA or by its ticketing system,reports, currency remittance and compensation in VARIG's name inrelation to the sale of airfares and correlated services effectedin France and the United Kingdom.

VARIG agreed that in the event of default, the Lessors could,without the need for notice of any type to the Lessees, declareearly call-in of the debt.

GECAS also questions the jurisdiction of the Brazilian Court toact on the issue, considering that the governing law of theAgreement is New York law.

Brazilian Court Sides with VARIG

Judge Luiz Roberto Ayoub of the 8th Corporate Court of theDistrict of Rio de Janeiro, Brazil, directs GECAS to abstain fromtransferring the amounts derived from the liquidation of theVARIG group's receivables generated by the BSP/IATA system and toreturn the amounts transferred as of the Petition Date.

"I feel that I must grant the request submitted by VARIG in itsentirety," says Judge Ayoub in his six-page decision.

Judge Ayoub explains that the provisions of article 50 of Law no.11.101/2005 render GECAS' actions abusive. Under article 50,"all the credits existing on the date of the request, even if notyet due, are subject to the Judicial Recovery." Thus, it is notconceivable that, after the Judicial Recovery was authorized, anycreditor could -- no matter what its reason may be -- takepossession of funds earmarked for the company's recovery,according to Judge Ayoub. The conclusion to accelerate thedebt's payment date does not have the power to affect fundsconstituted after the recovery process has commenced.

Judge Ayoub says accelerating the debt frustrates VARIG'srestructuring plan. The legal purpose of guaranteeing theprotection of the debtor and its property, starting on the filingdate of the request for judicial recovery, is clear and enoughreason to recognize that GECAS abused a right when it tookpossession of funds earmarked for the company's recovery plan.

Judge Ayoub further notes that that the issue is of the publicinterest, insofar as the principle of preservation of thebusiness is the basis for the entire system initiated by Law no.11.101/05, which went into effect as of June 9, 2005. Inaddition, Judge Ayoub says the transcript of the hearing held inthe U.S. Court shows that the Bankruptcy Court of the SouthernDistrict of New York recognizes the jurisdiction of the Braziliancourts to decide issues involving VARIG and GECAS regarding theJudicial Recovery Plan. Judge Ayoub maintains that under Section552(a) and (b) of the U.S. Bankruptcy Code, "property generatedafter the request for restructuring was filed must be free fromany lien so that the debtor can use it to effectivelyreorganize."

Due to identical reasons for justifying the concern forprotecting the debtor and the debtor's estate, Judge Ayoub saysthe Brazilian legislation grants the same treatment as the U.S.legislation, aimed at making the company's recovery feasible.

Judge Ayoub orders that notification of the requests and thedecision be given to Judge Drain of the U.S. Bankruptcy Court,which has jurisdiction to enforce the decision.

Headquartered in Rio de Janeiro, Brazil, VARIG S.A. is Brazil'slargest air carrier and the largest air carrier in Latin America.VARIG's principal business is the transportation of passengers andcargo by air on domestic routes within Brazil and on internationalroutes between Brazil and North and South America, Europe andAsia. VARIG carries approximately 13 million passengers annuallyand employs approximately 11,456 full-time employees, of whichapproximately 133 are employed in the United States.

The Company, along with two affiliates, filed for a judicialreorganization proceeding under the New Bankruptcy andRestructuring Law of Brazil on June 17, 2005, due to a competitivelandscape, high fuel costs, cash flow deficit, and high operatingleverage. The Debtors may be the first case under the new law,which took effect on June 9, 2005. Similar to a chapter 11debtor-in-possession under the U.S. Bankruptcy Code, the Debtorsremain in possession and control of their estate pending theJudicial Reorganization. Sergio Bermudes, Esq., at Escritorio deAdvocacia Sergio Bermudes, represents the carrier in Brazil.

VARIG S.A.: Preliminary Injunction Expires on Nov. 11-----------------------------------------------------The U.S. Bankruptcy Court for the Southern District of New Yorkdirects that all persons subject to the jurisdiction of the U.S.Court are enjoined and restrained from commencing or continuingany action to collect a prepetition debt against VARIG S.A. andits debtor-affiliates without obtaining relief from the Court.

The Hon. Robert Drain rules that the Preliminary Injunction willexpire at the end of the day on November 11, 2005. The Court willconvene a hearing on November 9 to consider whether to continuethe terms of the Preliminary Injunction. Objections to thecontinuation of the Preliminary Injunction are due November 4.

As reported in the Troubled Company Reporter, Varig obtained apreliminary injunction from the Bankruptcy Court enjoining andrestraining U.S. creditors from seizing its U.S. assets orrepossessing aircraft landing in United States airports.

The Court directs the Foreign Debtors to provide to their aircraftlessors, and to any other creditors upon written request:

(a) cash flow projections showing the Foreign Debtors' actual sources and uses of funds during the past three-month period, and estimated future sources and uses of funds through the 180-day period as provided in Section 6 of the NBRL, together with any assumptions underlying the projections;

(b) updated cash flow projections approximately every 30 days showing actual sources and uses of funds on a trailing three-month basis and any adjustments made to estimated future sources and uses of funds or assumptions set forth in the most recent prior projections and assumptions; and

(c) a fleet plan, to be updated periodically, indicating which aircraft are expected to be operational and in use each month by the Foreign Debtors.

The Foreign Debtors are also directed to develop a contingencyplan for the reasonable and orderly process of removing aircraftfrom commercial service.

Headquartered in Rio de Janeiro, Brazil, VARIG S.A. is Brazil'slargest air carrier and the largest air carrier in LatinAmerica. VARIG's principal business is the transportation ofpassengers and cargo by air on domestic routes within Brazil andon international routes between Brazil and North and SouthAmerica, Europe and Asia. VARIG carries approximately 13million passengers annually and employs approximately 11,456full-time employees, of which approximately 133 are employed inthe United States.

The Company, along with two affiliates, filed for a judicialreorganization proceeding under the New Bankruptcy andRestructuring Law of Brazil on June 17, 2005, due to acompetitive landscape, high fuel costs, cash flow deficit, andhigh operating leverage. The Debtors may be the first caseunder the new law, which took effect on June 9, 2005. Similarto a chapter 11 debtor-in-possession under the U.S. BankruptcyCode, the Debtors remain in possession and control of theirestate pending the Judicial Reorganization. Sergio Bermudes,Esq., at Escritorio de Advocacia Sergio Bermudes, represents thecarrier in Brazil.

W.R. GRACE: Battle Over Exclusivity to Continue on Dec. 19----------------------------------------------------------Judge Fitzgerald of the U.S. Bankruptcy Court for the District ofDelaware ruled in open court at an August 29, 2005, hearing thatthe periods within which W.R. Grace & Co. and its debtor-affiliates have the exclusive right to file a plan and to solicitacceptances for that plan are extended until December 19, 2005,the next omnibus hearing in the case.

The Official Committee of Asbestos Personal Injury Claimants, theOfficial Representative of Future Asbestos Personal InjuryClaimants and the Official Committee of Asbestos Property DamageClaimants have taken potshots at the Debtors' attempt to extendthe periods within which they have the exclusive right to:

(a) file a Chapter 11 plan of reorganization through and including Nov. 23, 2005; and

(b) solicit acceptances for that plan through and including Jan. 23, 2006.

David T. Austern, the legal representative for future asbestosclaimants, said that since the only plan on file is theDebtors' patently unconfirmable plan, real negotiations will notproceed until the playing field is finally made level by thetermination of exclusivity.

Theodore J. Tacconelli, Esq., at Ferry, Joseph & Peace, P.A., inWilmington, Delaware, speaking for the Asbestos Property DamageCommitte, said that the Debtors cannot point to one significantfinancing or business contract that would be jeopardized byterminating exclusivity speaks volumes about the marketplace'sperception of the Debtors' exclusivity.

W.R. GRACE: Wants Court to Enforce Stay on N.J. Civil Action------------------------------------------------------------On June 1, 2005, the New Jersey Department of EnvironmentalProtection brought a civil action against W.R. Grace & Co., W.R.Grace & Co-Conn., and two Grace employees, in the Superior Courtof New Jersey, in Mercer County. The DEP seeks to recover morethan $800 million on account of environmental claims.

Grace Filed "False Report"

James E. O'Neill, Esq., at Pachulski, Stang, Ziehl, Young Jones &Weintraub, P.C., in Wilmington, Delaware, informs JudgeFitzgerald that the New Jersey State Action charges Grace withviolating two state statutes:

The New Jersey Action alleges that Grace, which operated anindustrial plant in Hamilton Township, New Jersey, together withGrace's former employees, Robert J. Bettacchi and Jay H. Burrill,failed to disclose in a June 5, 1995, report to the DEP certainmaterial facts concerning the risks of processing asbestos-contaminated vermiculite. The New Jersey Action also allegesthat the Grace Defendants has continued to withhold the correctinformation that should have been included in the report and hasfailed to correct the misinformation provided there.

Allegations against Messrs. Bettacchi and Burrill track verbatimthose raised against the Debtors themselves, because Messrs.Bettachi and Burrill were acting on Grace's behalf in theircapacities as Vice President and Environmental Coordinator whenthey made the representations that New Jersey now asserts were"false and misleading."

As a result of filing the allegedly false report, the New JerseyAction seeks to assess liability against each Grace defendant for$25,000 under the ISRA and $50,000 under the Spill Act.

In addition, the New Jersey Action alleges that the Defendantshave committed a separate violation of the ISRA and the Spill Actfor "each day Defendants failed to correct the false information"set forth in the Report. Therefore, the DEP asserts that theDefendants' refusal to concede the falsity of the Report equatesto a $75,000 liability for every day from June 5, 1995, until thepresent day, for a total amount of civil penalties that exceeds$800 million and presumably grows each day.

As stated in a notice filed with the New Jersey Superior Court onSeptember 19, 2005, the Grace Defendants have removed the NewJersey Action to the United States District Court of New Jersey.The Defendants also intend to further seek the transfer of theAction to the District Court of Delaware so that the BankruptcyCourt may assume jurisdiction over it and decide on the case inthe course of the Debtors' bankruptcy.

Mr. O'Neill relates that the separate prosecution of the NewJersey Action will inevitably threaten the orderly administrationof the Grace estate.

New Jersey Action Violates Sec. 362

The Debtors ask Judge Fitzgerald to find that the continuedprosecution of the New Jersey Action would violate the automaticstay. Section 362(a) of the Bankruptcy Code prohibits thecommencement or continuation of any judicial proceeding against adebtor to recover on claims that arose before the Petition Date.

Mr. O'Neill tells Judge Fitzgerald that because the $800 millionthat New Jersey seeks to recover from the defendants is notproportional to any safety or welfare interest that the State mayhave in the Action, the Action should be recognized for being "asizable financial claim on the bankruptcy estate, which should bedealt with on the same terms that the Bankruptcy Code providesfor all other creditors."

As the Third Circuit of Appeals has recognized, "[i]n addition toproviding the debtor with a 'breathing spell,' the [automatic]stay is intended to replace an unfair race to the courthouse withan orderly liquidation procedure designed to treat all creditorsequally."

The magnitude of the fines in the New Jersey Action and its lackof proportion to any real harm to the public health and welfaredemonstrates that its underlying purpose is to put money in theState's coffers, not to enforce any conceivable regulatoryinterest, Mr. O'Neill notes. The New Jersey Action does not seekto protect the "general safety and welfare" by requiring thedebtors to clean up the environment or repay the government fordamages caused.

"Because the extravagant size of the claimed liability bears noproportional relationship to the State's interest in the 'generalsafety or welfare,' the DEP's interest extends 'principally' tothe State's 'interest in the debtors' property' and shouldtherefore be declared subject to the automatic stay," Mr. O'Neillsays.

Mr. O'Neill adds that the New Jersey Action does not constitute a"police power" action under the Bankruptcy Code. The BankruptcyCode provides that automatic stay will not apply to actions "by agovernmental unit to enforce such government unit's police orregulatory power, including the enforcement of a judgment otherthan a money judgment."

Request for Section 105 Injunction

Alternatively, if the Bankruptcy Court determines that the NewJersey Action is not subject to the automatic stay, the Debtorsseek a preliminary and permanent injunction staying theprosecution of the New Jersey Action under the general equitablepowers provided by Section 105 of the Bankruptcy Code.

Mr. O'Neill contends that the New Jersey Action clearly andunduly interferes with the bankruptcy and threatens the estate'sassets. Given the potential size of the New Jersey Action, theDebtors and the creditors simply could not agree on areorganization plan that did not account for the threat of themassive additional liability hovering outside the bankruptcycase.

In addition, the Debtors would also suffer irreparable harm ifthey were forced to litigate the New Jersey Action outside theconfines of the bankruptcy process.

The Debtors want the responsible New Jersey DEP officialsenjoined from prosecuting the New Jersey Action until the timethat the Bankruptcy Court assumes jurisdiction over the removedand transferred action, or if the action is not brought beforethe Bankruptcy Court, until the Debtors emerge from bankruptcy.

Complaint vs. Officers Should be Stayed

Mr. O'Neill relates that the Debtors' by-laws require that Graceindemnify, to the fullest extent allowed under applicable law,each person who was, is made, or is threatened to be made a partyto or is involved in any action by reason of his employment withGrace. Thus, the financial burdens of the entire New Jerseylitigation fall squarely on the Debtors and, by extension, allcreditors of the estate.

Therefore, the Debtors also ask Judge Fitzgerald to rule that theNew Jersey Action is stayed against Messrs. Bettacchi and Burrillbecause the claims against these individuals cannot be separatedfrom the claims against Grace. The DEP has filed suit based onthe Individual Defendants' conduct as Grace's employees.

The Debtors argue that the lawsuit against Messrs. Bettacchi andBurrill to recover civil penalties for alleged submissions offalse statements is a "transparent attempt to circumvent theprotections of the automatic stay."

Mr. O'Neill contends that there is a substantial identity ofinterest between Grace and its employees, and the stay againstGrace should be extended to the action against its co-defendants.Moreover, it is plain that Grace is the real party defendant.Any judgment against Grace's employees might be imputed againstthe Debtors in subsequent litigation, thus, Grace has a directinterest in the outcome of New Jersey's action against theindividual Grace officers. The action against Messrs. Bettacchiand Burrill is in fact an action against the Debtors.

WASTE SERVICES: Intends to Amend Existing Senior Credit Facility----------------------------------------------------------------Waste Services, Inc. (Nasdaq: WSII) intends to seek an amendmentto its existing senior credit facility in order to secure morefavorable terms, including lower interest cost and greaterflexibility and liquidity, in light of its improved financialperformance over the past year.

The company says it will disclose the terms of any amendment ifand when it has been completed.

Waste Services, Inc. is a multi-regional integrated solid wasteservices company that provides collection, transfer, disposal andrecycling services in the United States and Canada. The company'sweb site is http://www.wasteservicesinc.com/

* * *

As reported in the Troubled Company Reporter on Oct. 10, 2005,Moody's Investors Service upgraded the ratings of Waste Services,Inc. These ratings were affected:

* $160 million guaranteed senior subordinated notes due 2014, upgraded to Caa2 from Ca; and

* the company's Corporate Family Rating upgraded to B3 from Caa1.

Moody's assigned a stable outlook.

WELLSFORD REAL: Stockholders Meeting Set for Nov. 17----------------------------------------------------Wellsford Real Properties, Inc. (AMEX:WRP) said that its annualstockholder meeting will be held on Nov. 17, 2005 at 9:30AM. Theboard of directors of the Company has fixed the close of businesson Oct. 11, 2005, as the record date for determining thestockholders entitled to receive notice of and to vote at thestockholder meeting.

One of the purposes of this meeting is to consider and voteregarding the previously announced plan of liquidation anddissolution of Wellsford Real.

As reported in the Troubled Company Reporter on May 23, 2005, theCompany's Board of Directors approved a Plan of Liquidation anda 1-for-100 Reverse Stock Split and a 100-for-1 Forward StockSplit of its common shares.

Under the Plan, the Company intends to sell its assets, to pay orprovide for its liabilities, and to distribute its remaining cashto its stockholders. The Board currently estimates thatstockholders could receive $18.00 to $20.50 per share in totaldistributions over the liquidation period including an initialdistribution of $12.00 to $14.00 per share within 30 days afterthe later of the closing of the sale of the Palomino Park rentalapartments and stockholder approval of the Plan. The estimatedtime frame for payment of these proceeds will be described in theproxy statement to be filed.

A Stock Split would reduce the number of record holders of theCompany's common stock to below 300, thereby making the Companyeligible for:

(i) deregistration under the Securities Exchange Act of 1934, as amended, and

(ii) the de-listing of its common stock from the American Stock Exchange.

Accomplishing these objectives would relieve the Company of thecosts associated with complying with the various reporting andgovernance requirements of the Securities and Exchange Commissionand American Stock Exchange. This action also would save theCompany significant expenses associated with Sarbanes-Oxley Actreporting requirements. It is anticipated that only stockholdersowning 99 or fewer pre-split common shares of the Company wouldreceive $20.50 per pre-split share in cash for their shares.Currently, the Company has 6,467,639 common shares outstanding andit is anticipated that approximately 4,000 common shares will bepurchased by the Company in order to complete the Stock Split.

WRP is a real estate merchant banking firm headquartered in NewYork City which acquires, develops, finances and operates realproperties, constructs for-sale single family home and condominiumdevelopments and organizes and invests in private and public realestate companies.

WESTERN WATER: Exclusive Plan Filing Period Stretched to Dec. 20----------------------------------------------------------------The U.S. Bankruptcy Court for the Northern District of Californiaextended Western Water Company's period until Dec. 20, 2005,within which it alone can file a chapter 11 plan. The Court alsogave the Debtor until Feb. 20, 2006, to solicit acceptances ofthat plan from its creditors.

The Debtor explained that it is in the best interest of its estateand creditors to wait until the sale transaction for the CherryCreek Project and its other assets is approved and completedbefore it files a chapter 11 plan.

The Cherry Creek assets, consisting of real property and waterrights in the Cherry Creek basin, Colorado, is the Debtor's mostvaluable asset. The assets are recorded at approximately $12.5million in the Debtor's books but the Debtor says it is worthsubstantially more than its book value.

The Debtor has already obtained authorization to retain realestate brokers to market the Cherry Creek Project and it has apending request with the Court to approve the sale ofsubstantially all of its assets, including the Cherry Creekassets. The hearing to approve that sale request is tentativelyscheduled on Sept. 26, 2005.

The sale of the Cherry Creek assets, together with the Debtor'sother remaining assets, will provide the needed funding to paycreditors under its proposed plan.

Headquartered in Point Richmond, California, Western Water Companymanages, develops, sells and leases water and water rights in thewestern United States. The Company filed for chapter 11protection on May 24, 2005 (Bankr. N.D. Calif. Case No. 05-42839).Adam A. Lewis, Esq., at the Law Offices of Morrison and Foersterrepresents the Debtor in its restructuring efforts. When theDebtor filed for protection from its creditors, it listedestimated assets and debts between $10 Million and $50 Million.

WORLDCOM INC: Provision of Net Proceeds to Underwriter Defendants-----------------------------------------------------------------As previously reported, Judge Denise Cote of the United StatesDistrict Court for the Southern District of New York approvedsettlements between WorldCom investors and these defendants:

Judge Cote rules that subject to the provisions of theSupplemental Plan of Allocation, the net proceeds of thesettlements with the Underwriter Defendants will be distributedonly to Class Members who purchased WorldCom bonds issued in theMay 2000 and May 2001 bond offerings, as:

(1) State of Louisiana, XCL, Ltd., William Kimball, et al., individually and as representatives of a class of those similarly situated v. WilTel, Inc. and WilTel Communications; and

(2) State of Louisiana, William Kimball, et al., individually and as representatives of a class of those similarly situated v. Sprint Communications Company, et al.

The Louisiana Suits were consolidated for pre-trial management,administration and discovery on July 3, 1996.

The defendants in the Louisiana Suits included SprintCommunications and the predecessors of MCI WorldCom NetworkServices, Inc.

The Louisiana Plaintiffs alleged that:

(1) they represented a class of persons who own or owned property on which Sprint and MWNS placed telecommunications facilities;

(2) the telecommunications facilities were located within servitudes granted by their predecessors-in-title to other entities, like railroads, which have tracks running through the property; and

(3) the language granting the servitudes was not broad enough to include the placement of the telecommunications facilities, thus, the telecommunications facilities were improperly located on their land.

On November 18, 2000, the Parties to the Louisiana Suits reachedan agreement in principle for the settlement of the claims.

The terms of the Settlement, which the Parties executed in 2001,are:

(a) The Settlement Class does not include landowners who opt out during the notification and approval process;

(b) Pecuniary benefits were offered to the class members based on two categories:

* Fully Qualifying Landowner Benefits who are entitled to payment of a determinable amount per linear foot; and

* Partially Qualifying Landowner Benefits who are entitled to a set amount per linear foot.

(c) In exchange for the pecuniary benefits, class members will release any and all of their claims against Sprint and MWNS arising out of the presence of the telecommunications facilities on their property or servient estate, and will formally recognize and grant servitudes and rights of way for the telecommunications facilities.

(d) A claims procedure will be administered by an independent third party claims administrator. The claims administration process included the retention of a mapping company and an abstract company to search the tax assessor records of the parishes through which the telecommunications cables pass and to identify potential class members who own land under or adjacent to the cable side of the rights of way in which the telecommunications cables lie.

In September 2001, the Louisiana State Court approved the ClassAction Settlement Agreement.

On May 29, 2002, the Louisiana Court approved the form of a noticeand the procedure of distribution of the Notice of the ClassAction Settlement Agreement. The Notice was distributed to over8,000 landowners. Pursuant to the notice, members of theSettlement Class were given the option of (i) submitting claimsfor Fully Qualifying Landowner Benefits or Partially QualifyingLandowner Benefits; (ii) taking no action; or (iii) opting out ofthe Settlement Class. Only 38 landowners submitted forms optingout of the Settlement Class.

As of the Petition Date, the Louisiana Suits were stayed as toMWNS. However, it went forward with respect to Sprint. TheLouisiana Court granted final approval to Sprint's SettlementAgreement on December 5, 2002.

The Louisiana First Circuit Court of Appeal subsequently issued adecision, reversing the approval on the ground that the classmembers were not given adequate notice about MWNS's bankruptcyfiling, which could have an effect on how the settlement wasimplemented with respect to the remaining parties.

The Louisiana Right-of-Way Claims

After the Petition Date, numerous Louisiana landowners filedtimely proofs of claims asserting right-of-way claims or claimsbased on the Settlement Agreement. To resolve the proofs of claimand the underlying right-of-way causes of action, theClaimants and MWNS agreed to go forward with the SettlementAgreement with respect to MWNS as a prepetition contract.

Mr. Steffes also asserts that the Settlement Class satisfies theCivil Rule 23(b)(3) requirements by eliminating individual issuesthat would otherwise predominate over the common issues and renderthe class action an inferior means of adjudication.

The Parties believe that the Court should designate the LouisianaPlaintiffs as class representatives and the Plaintiffs' counsel asClass Counsel because they have diligently advanced the interestsof the Settlement Class for more than 10 years, from the filing ofthe Louisiana Suits in 1994.

(1) The Settlement Agreement was negotiated by the Parties in the Louisiana Suits at arm's-length with the assistance of an impartial third-party mediator providing no preferential treatment for the class representatives. The Implementation Agreement likewise was negotiated at arm's- length by counsel for the Debtors and the Kimballs.

(2) Under the settlement terms, no preference is given to any single class member over the class as a whole.

(3) Extensive discovery has taken place over the years by both sides.

(4) The advantages offered by the settlement are further demonstrated by comparison with the costs and risks of litigating the class certification issue. A settlement agreement is particularly favorable when it avoids the cost of litigating class status which is often a complex litigation within itself.

(5) The overwhelming majority of the class members remained in the Settlement Class because they saw it as providing generous payments to class members with valid claims in exchange for formal recognition of a servitude for telecommunications facilities that have no or little impact on a landowner's use of the property at issue.

(6) The Implementation Agreement benefits the members of the Settlement Class by entitling them to be paid on the same terms as the Debtors' other creditors in the same position.

(7) The Implementation Agreement and proposed notice address the concerns raised by the Louisiana appellate court in its reversal of the approval of the settlement with respect to Sprint.

The Kimballs propose that a notice will be provided in accordancewith the Louisiana appellate court's ruling with respect toSprint. The Proposed Notice will inform the Class Members thatonly MWNS -- and not Sprint -- is involved in the implementationof the portion of the settlement.

* * *

Judge Gonzalez rules that the Settlement Class is preliminarilycertified for settlement purposes pursuant to Civil Rule 23 andRule 7023 of the Federal Rules of Civil Procedure.

The Settlement Class will comprise of all persons possessing orclaiming to possess, for some period of time within theCompensation Period, a Servient Estate or a full ownershipinterest in the Covered Property, except:

(a) Sprint and its affiliates and directors or officers;

(b) MWNS and its affiliates and directors or officers;

(c) the United States of America;

(d) any parishes, municipalities, State Governments, foreign governments, or other public entities;

(e) any railroad or any person controlled by, under the control of, or under common control with any railroad;

(f) any utility that granted rights for use of Right-of-Way to any of the Settlement Class Defendants for purposes of that particular Right-of-Way, or any person controlled by, under the control of, or under common control with any utility with respect to such Right-of-Way; and

(g) any person or entity that has previously granted a servitude to any of the Settlement Class Defendants granting permission to install Telecommunications Facilities on Right-of-Way.

The Court will hold a final fairness hearing on December 6, 2005,to determine whether to grant final certification of theSettlement Class and final approval of the Settlement.

The Court directs the Parties to provide notice to members of theSettlement Class by mailing to them the Class Action SettlementImplementation Notice to the extent practical and by supplementingthe notice with two publications of the Class Action SettlementImplementation Notice.

Headquartered in Clinton, Mississippi, WorldCom, Inc., now knownas MCI -- http://www.worldcom.com/-- is a pre-eminent global communications provider, operating in more than 65 countries andmaintaining one of the most expansive IP networks in the world.The Company filed for chapter 11 protection on July 21, 2002(Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, theDebtors listed $103,803,000,000 in assets and $45,897,000,000 indebts. The Bankruptcy Court confirmed WorldCom's Plan onOctober 31, 2003, and on April 20, 2004, the company formallyemerged from U.S. Chapter 11 protection as MCI, Inc. (WorldComBankruptcy News, Issue No. 102; Bankruptcy Creditors' Service,Inc., 215/945-7000)

* Thomas Osmun Returns to AlixPartners--------------------------------------AlixPartners, the international corporate restructuring,turnaround, performance improvement, and financial advisory firm,announced that Thomas Osmun has rejoined the firm as a Director inits New York office.

"I am excited to be back with AlixPartners," Mr. Osmun said. "Itis truly a pioneer organization, having spearheaded so much of thecorporate turnaround industry."

Mr. Osmun holds a bachelor's degree in business administrationfrom Bucknell University, and a master's degree in businessadministration from the Fuqua School of Business at DukeUniversity.

About AlixPartners

AlixPartners -- http://www.alixpartners.com/-- is internationally recognized for its hands-on, results-oriented approach to solvingoperational and financial challenges for large and middle marketcompanies globally. Since 1981, the firm has become the "industrystandard" for performance improvement aimed at producing bottom-line results quickly and helping clients achieve a more positiveoutcome during times of transition. The firm has over 450employees in its Chicago, Dallas, Detroit, Dsseldorf, London, LosAngeles, Milan, Munich, New York, San Francisco, and Tokyooffices.

Monday's edition of the TCR delivers a list of indicative pricesfor bond issues that reportedly trade well below par. Prices areobtained by TCR editors from a variety of outside sources duringthe prior week we think are reliable. Those sources may not,however, be complete or accurate. The Monday Bond Pricing tableis compiled on the Friday prior to publication. Prices reportedare not intended to reflect actual trades. Prices for actualtrades are probably different. Our objective is to shareinformation, not make markets in publicly traded securities.Nothing in the TCR constitutes an offer or solicitation to buy orsell any security of any kind. It is likely that some entityaffiliated with a TCR editor holds some position in the issuers'public debt and equity securities about which we report.

Each Tuesday edition of the TCR contains a list of companies withinsolvent balance sheets whose shares trade higher than $3 pershare in public markets. At first glance, this list may look likethe definitive compilation of stocks that are ideal to sell short.Don't be fooled. Assets, for example, reported at historical costnet of depreciation may understate the true value of a firm'sassets. A company may establish reserves on its balance sheet forliabilities that may never materialize. The prices at whichequity securities trade in public market are determined by morethan a balance sheet solvency test.

A list of Meetings, Conferences and Seminars appears in eachWednesday's edition of the TCR. Submissions about insolvency-related conferences are encouraged. Send announcements toconferences@bankrupt.com/

Each Friday's edition of the TCR includes a review about a book ofinterest to troubled company professionals. All titles areavailable at your local bookstore or through Amazon.com. Go tohttp://www.bankrupt.com/books/to order any title today.

Monthly Operating Reports are summarized in every Saturday editionof the TCR.

For copies of court documents filed in the District of Delaware,please contact Vito at Parcels, Inc., at 302-658-9911. Forbankruptcy documents filed in cases pending outside the Districtof Delaware, contact Ken Troubh at Nationwide Research &Consulting at 207/791-2852.

This material is copyrighted and any commercial use, resale orpublication in any form (including e-mail forwarding, electronicre-mailing and photocopying) is strictly prohibited without priorwritten permission of the publishers. Information containedherein is obtained from sources believed to be reliable, but isnot guaranteed.

The TCR subscription rate is $675 for 6 months delivered via e-mail. Additional e-mail subscriptions for members of the same firmfor the term of the initial subscription or balance thereof are$25 each. For subscription information, contact Christopher Beardat 240/629-3300.